Good morning. Thank you for joining Burberry's Q1 trading update call. My name is Ian Brimicombe, Interim Chief Financial Officer, and I'm joined by Julian Easthope, VP Investor Relations. Slides are available to accompany this presentation on the investor section of our website, and a transcript will also be made available. I will run through our performance for the first quarter of FY 2024 before taking your questions. On slide 2, I summarize our progress during Q1. As usual, I will refer to growth rates at constant exchange rates, CER. Comparable store sales grew by 18%, with robust recovery in Mainland China, up 46%. Outside Mainland China, we achieved another quarter of double-digit growth, rising 11%, with a very strong performance in EMEA, South Asia Pacific, and Japan.
We continue to see a good underlying performance from our core product categories, with outerwear seeing growth of 36% as it continues to benefit from the campaign accompanying the brand's relaunch in February. Leather goods saw growth of 13%, supported by our house codes. We continued our program of brand and product activations with the launch of our summer capsule and celebrated the reopening of our new Bond Street flagship store in London. Finally, we commenced a further GBP 400 million share buyback in the quarter to be completed by the end of this calendar year. EMEA enjoyed another strong quarter of double-digit growth, increasing 17%, boosted by tourism, up 53% in the period, with tourism increasing from 38%-51% of sales. Outerwear was the standout category in EMEA, increasing over 30% in the period.
Americas saw an 8% decline in comparable store sales, broadly in line with the fourth quarter of last year. We remain confident in the long-term prospects for the region and have accelerated the store refurbishment program, with a further 6 stores completed in the quarter. Mainland China showed a strong recovery during Q1, with sales up 46%. While this was a single-digit decline over two years, we saw an acceleration from the Mainland Chinese customer globally to mid-teens over the same period, with travel seen mainly near shore in Asia and some modest growth in EMEA. Asia Pacific was very strong, up 36% in Q1, with South Korea up 6%, Japan up 44%, and South Asia Pacific up 39%. Slide 4 provides a breakdown of our retail sales. As mentioned, comparable store sales grew 18% in the quarter.
The contribution from space is +1%, leading to 19% growth in retail sales at constant exchange rates, totaling GBP 599 million. Currency was a 2% headwind this quarter, with retail revenue landing at GBP 589 million, up 17% at reported exchange rates. Moving on now to brand. In the quarter, we continued to build our new visual expression for Burberry. In May, Burberry attended the Met Gala, where we were joined by British and international talent, including Jodie Comer and Stormzy, wearing custom Burberry looks. We have also continued to inspire and engage our younger consumer base with social media content, iconizing our brand codes. We achieved our most-viewed post on TikTok with 20.8 million views of a post featuring our blue rose print, originally unveiled at Daniel's debut runway show in February.
Shifting the focus to product. In the quarter, we introduced A Burberry Summer, Daniel Lee's debut swimwear campaign, reinforcing our new brand aesthetic and reasserting ourselves as a consumer brand for the summer. The collection was inspired by Burberry's heritage of adventure, with the check taking center stage across a curation of summer ready-to-wear and beach totes. This was supported by dedicated store windows in over 80 stores in key locations, as well as 15 pop-ups, including seasonal locations in Turkey, Italy, and Thailand. We continue to see double-digit growth in leather goods, up 13%, underpinned by our Frances shapes, as well as the Vintage Check line, highlighting the power of our house codes. Outerwear remained very strong, rising 36%, driven by our brand relaunch campaign, along with the VIP dressing at the runway show in February, both celebrating the iconic Burberry trench coat.
We are encouraged by the performance of our core product categories ahead of the launch of Daniel Lee's first runway collection, reaching stores in September. As we continue to bring a strong sense of Britishness to the brand, in June, we launched 3 cultural collaborations with major British arts institutions: the Royal Academy, Royal Opera House, and National Gallery. For the 3rd consecutive year, we sponsored the Summer Exhibition Preview Party at the Royal Academy, celebrating the summer exhibition and fundraiser for the RA Schools. We also collaborated with director and choreographer Wayne McGregor to create the costumes for his latest work for the Royal Ballet, designed by Daniel. The new ballet production debuted with its world premiere in June, performed at the Royal Opera House in London. We also sponsored the National Gallery Summer Party for the 2nd consecutive year.
We have made good progress on our store refurbishment program, with a further 19 completed in the quarter, giving a total of 126 stores now in the new format. In June, we reopened our new Bond Street flagship store in London. This iconic destination reinforces Burberry's position as the modern British luxury brand, offering an immersive shopping experience across all product categories, with a stronger focus on leather goods and a new VIP area to continue to develop our elite customer base. We also opened a new temporary store on Fifth Avenue, New York, while our 57th Street store is under renovation. We remain on track to complete over 50% of the store network by the end of FY 2024, and to finish the rollout across the global portfolio by FY 2026.
Moving on to our responsibility agenda, Burberry Beyond, we made progress in all four pillars. This was especially the case in support of our communities, with the expansion of our flagship community program, Burberry Inspire. Designed in partnership between Burberry Group PLC, The Burberry Foundation, and International Youth Foundation, the initiative will support 500,000 young people over the next three years to unlock their creativity and drive positive change. We also announced a two-year partnership with The BRIT School to support fashion education worldwide and help young people from global majority backgrounds to enter the creative industry. In June, we awarded the annual Thomas Burberry Prize, building on our long-standing partnership with the Royal Academy of Arts. The award reflects Burberry's continued commitment to supporting the next generation of British creatives in contemporary arts and culture.
To build on this, Burberry is also proud to announce the launch of an RA Schools Scholarship Grant and Bursary. The current year outlook and guidance. We confirm our near-term guidance for FY 2024 to grow revenue at high single-digit CAGR from 2020 to 2024 at CER, equating to a low double-digit growth in FY 2024 versus the prior year, and around 20% adjusted operating profit margin. We are expecting retail space to be broadly flat for the year. For wholesale revenue, we are guiding to around a low double-digit decline in H1. Expect the full year to recover to broadly flat growth, with the cadence impacting H1, H2 revenue weighting. The effective tax rate is expected to be around 27%, primarily due to the increase in the U.K. corporate tax rate from 19% to 25%.
We expect Capex at around GBP 200 million, including GBP 120 million on stores. Currency is now expected to be a headwind to revenue of around GBP 150 million and adjusted operating profit of around GBP 70 million, based on 29 June spot rates. Finally, in June, we commenced a further GBP 400 million share buyback that we expect to complete in the current calendar year. I shall now open the floor to questions.
Ladies and gentlemen, if you wish to ask a question, please press Star followed by one. If you change your mind and wish to remove your question, please press Star followed by two. When preparing to ask your question, please ensure that your phone is unmuted locally. To confirm, it will be Star followed by one. Our first question today is from Chiara Battistini from J.P. Morgan. Please go ahead with your question.
Thank you. Good morning, everyone. I have three, please. First question is on the collection that Daniel Lee presented in Paris, so the spring collection for next year. I was just wondering if you could share with us some early feedback on the response on that collection, and also how to think about the evolution of the average selling price for that collection versus where we are today. The second question is on wholesale in the U.S. I was wondering if you could update us on what you've been seeing over the quarter in terms of wholesale behavior in North America, if anything has changed since last quarter?
Finally, I was wondering on the Chinese consumer that is now coming back, if you can comment on any changes you're seeing in their purchasing behavior and how that cluster has been evolving. I understand travel has been picking up, but anything else also in terms of what they are purchasing and what kind of preferences they are showing? Thank you.
Thank you, Chiara. Let's deal with those one by one. First, the Spring 24 collection. Yes, that has been viewed by wholesalers, and we're really pleased with the response that we've got from them. The order books have been completed now. That's been a great response. Actually, across the world. Americas, as you note in your second question, a little bit under pressure at the moment, but I think we met expectations there and very strong response from EMEA and Asia travel as well. That was great. The sentiment is very strong, I think, and if as we get to the half year, we'll be able to update you more.
The summer collection will come through in the show in September, and that order book will be completed in September. More to come there, but good early feedback from all parties. Our region's obviously exceptionally excited to receive the product in due course, which will probably in spring terms, will be out in stores around December. In terms of pricing, obviously, we will take the opportunity to review all pricing of each collection as it comes through. We'll do that in the context of global indices, the competition, and taking into account, to some extent, movements in FX as well. The collection will be elevated in price. It's great quality, and I think people will respond well to it, but the pricing will be elevated relative to where we are today.
In terms of wholesale U.S. behavior, I touched on it. There is a tough macroeconomic environment in the U.S. at the moment. I think the wholesalers are feeling it. They've been destocking. Their response was within expectation, but obviously, they've got their own businesses to manage and run. I think they'll probably a little wait and see, what catches on.
In Americas, we're pleased with the response there. Again, as I say, stronger response in EMEA and Asia travel retail. On the Chinese consumer, I think you're right to point out that the cluster of Chinese is really being boosted by the recovery of tourism, particularly nearshore, Hong Kong, Macau, South Asia-Pacific, has been strong, and indeed, Japan as well. That's where we're seeing significant growth in the Chinese as a cluster. The response into, or the travel into EMEA, I would say it's a bit more muted, although it's increasing. We were around 2%-3% last year. We're up to 8% of EMEA sales for the Chinese in Q1, that is a continuing recovery.
We don't bake in too much strength in that recovery for the rest of the year. We think there are still some barriers to overcome there, not least of which are visa applications and flight capacity. Slightly slower recovery happening in EMEA, but very strong recovery coming through in nearshore. As a cluster itself, the Chinese grew mid-teens % against LLY in Q1, and that's an acceleration from Q4, where we were +11 versus LLY. It's great to see that acceleration on a comparable period basis over two years. We're pleased with that response, and hopefully, the recovery will keep going.
Thank you. If I can just ask a couple of follow-up questions. On the Chinese cluster, can you remind us now how much of your sales the Chinese cluster represents? In terms of purchasing behavior, are you seeing maybe more strength in the higher ASPs compared to the entry points, or any difference from that point of view? A follow-up on your answer on the spring collection. You mentioned the order book has been finalized. Can you give us any indication on how to think about the order book into next year, please?
Just on the order book, yeah, we're just confirming guidance this time around.
Okay.
We've said wholesale revenues will be low double digit down H1.
Okay
recovering in H2, flat for the full year. Not much more to add there. On the Chinese cluster, I think we're into the low 30s%. Of course, pre-pandemic, we were at 39, so there's potential to recover there. AURs, yes, we're picking up strength in leather and outerwear across the world, really. That's the higher AUR categories, which are going well, not only for the Chinese, but elsewhere as well. You know, again, a positive, solid response continues the leather and outerwear, and that's reflected in the overall comp +18 for the quarter.
Perfect. Thank you very much.
Thanks, Kiara. Thank you.
Our next question is from Thomas Chauvet from Citi. Your question please.
Good morning, Ian and Julian. 3 questions, please. The first one to follow up on Chiara's wholesale question. I'm trying to understand the swing between H1 and H2, understand you confirmed full-year guidance track. For the first half down, low double digit, that would probably include the U.S. down 40%-50%. The second half, up double digit, that's flat for the year. Are you effectively expecting the difficult U.S. environment to revert in the second half on an underlying basis? Is it about Daniel Lee's collection hitting the stores? Is it, you know, your expectations of Asia travel retail blooming? I'm trying to understand how we go from such a negative situation in H1 to H2. That's my first question. The second one about the quarter.
Could you talk about how June or even July, compared to the 18% like in the period, especially in China, where the comp base becomes a lot tougher from June, July, when the government lifted most restrictions last year, at least in some of the big cities? Finally, a question on leather goods. It's been a few quarters, you've mentioned the Francis bag to be very successful. How do you think about the architecture of the end bags range? I remember Marco Gobbetti restructured the families of bags so that four, five lines contributed to 70% + of sales. Which would you say are the top four, five lines of bags now that are contributing the most and you think will remain as carryover lines?
I guess the Frances, the Lola, maybe the TB. Anything else to call out that will form the pillars of Burberry's successful leather business? Thank you.
Thank you very much, Thomas. Wholesale, H1, H2, yes, you're right to say we've confirmed guidance, the same pattern as we've seen before. Remember, autumn/winter 23 was pretty well set in May, we were able to confirm that first part of the year, and certainly it was driven by Americas nervous in the macroeconomic headwinds are suffering there, plus they were destocking from previous positions. That's really driven those double-digit decline in H1. We do see some recovery, some small recovery from Americas, actually, we're not dependent on for that. It's really coming from EMEA and Asia travel retail in terms of that recovery in the second half, which is why we're able to confirm that we're flat.
We've already had the spring order book, in place, that's encouraging. It's very well received, and we've got summer to come. We're, you know, confident that we remain, in line with that guidance that we set out in May for wholesale. In terms of June, July patterns relative to the +18, we're not going month by month or week by week with you on comp. You're right to say that China comp will be tougher. We've sort of suffered the inverse this year compared to last year. While last year we were out Q1, Q3 in China, you're gonna find those easier comps, Q1, Q3, and tougher comps, Q2, Q4. That pattern is right, we're obviously, we're able to still confirm the full year guidance, notwithstanding, that movement.
I would say that the ex-China business is very solid. You know, we hit -11% last year, and we're -11% this quarter as well. You'll see that continuing through the year, I think, more stable than you will see the China comps, which ultimately will influence the movements in group comps overall. Leather, yes, we're obviously, we did a reset with Marco on our on leather goods offering. The architecture was complete. We've had great success last year with Lola. In fact, we're comping that in Q1 as well. That was a great campaign we did. Those will carry forward. They'll be part of our offer going forward. There's some great strength there. The Burberry check line, the Vintage Check, and the Frances shapes, as you called out, the TB hardware line.
All of those are going well for us and will carry forward for us. What's really exciting, of course, is Daniel's new bags, and if you've had a chance to go to Bond Street, you will see a selection of them coming in stores in September. That's on sale for preorder in that selection, and that's going really well. A lot of excitement about those new bags to come, the Knight, the Chest, and the Shield. They all look fantastic. They dial into the Britishness of the brand. There's some great detail there. There's a high level of quality attached to them. Just a fantastic offering. I hope that will come through for us as well.
The bag collection that we have at the moment, we're pretty pleased with, and it's showing some strength within that sort of leather goods increase in Q1 of 13%.
Thank you.
Thank you, Thomas.
The next question comes from Zuzanna Pusz from UBS. Please go ahead.
Good morning, this is Susy Tibaldi on behalf of Zuzanna Pusz. Two questions, please. First question, how should we think about the step up in the percentage of SKUs coming from Daniel Lee, thinking quarter by quarter? Specifically, when can we expect it to hit around 50% of SKU in the stores? Secondly, on the nationalities, can you provide a bit of comments on the local European consumers? Are you seeing any sign of weakness at all? I know you mentioned that in the U.S., you're seeing a bit of weakness at the aspirational price points. Is that something that you're seeing among European locals as well? Thank you.
Thank you, Susy, and thank you for stepping in. The SKUs from Daniel. Daniel was obviously led the winter campaign, winter 23, and it's really that which will be starting to roll into stores from September. He's also been responsible and led the spring/summer pre-collection. Again, we talked about that order book for spring already being completed, with the summer runway to come in September and the summer order book to follow thereafter. That will be in stores really spring in December, summer coming through into the new year, January, February. The newness in the collections, including the runway, is around about 50% of our business.
It's going to take some time for Daniel's product to build through our total offer, but again, really excited to introduce his product in September in terms of that winter 23 collection. In fact, we've launched the autumn/winter 23 campaign this week, so you'll see some imagery coming from the Isle of Skye and the Giant's Causeway of Northern Ireland. Some fantastic imagery and some great shots of what's to come in September for autumn/winter 23, particularly Daniel's element in the runway. We're not going to give percentages step by step in terms of proportions of when Daniel's product is going to be in the store, but you can see this as a sort of a three-season program, and then ultimately, elements of it will fall into replenishment as well.
He'll be working on replenishment over time. That's the program and the cadence. I hope that helps you. In terms of Amir Nationals, Amir cluster and customers, yeah, a little weaker this quarter, at -low single digits, compared to the +high single digit last quarter. We're not overly concerned with that. I think there was, you know, reasonable strength in tourism. Tourism in Amir was up, you know, 53%, so the region's doing well. Amir Nationals, I think we were focused on locals. We've switched to tourists now, overall, the Amir region is +17% for the quarter. Still quite strong, but nothing particularly concerning us on the movement on Amir or the cluster itself.
The U.S. aspirational customer, I think while we're still building our offer for the aspirational customer, and we're very intent on recruiting new customers, which remain, you know, nearly 50% of our business in the U.S., it's fair to say that the high-net-worth individuals are really indexing higher at the moment in Americas, and they're buying into the leather goods and outerwear offer at the higher AUR. That's coming more to the fore now, compared to the U.S. aspirational customer that's softened a little, but we want to dial into that aspirational customer, not only in Americas, but globally as well. Hopefully, that will come back, but at the moment indexing on the higher income bracket.
Is that comment applicable also for the European consumer? Also within the European consumer, you're seeing better strength on the higher end, and the weakness is driven more by the aspirational consumer?
Yeah, I think that's right. The outerwear and other goods are going strong. They are higher AUR categories. We are seeing, you know, strength in that and that higher income bracket, across EMEA as well. That's quite right.
Perfect. Thanks a lot.
Thanks, Susy. Thank you.
The next question comes from Thierry Cota from SG. Please go ahead.
Yes, good morning, gentlemen. Thank you for taking my questions. Three questions for me. First, can you quantify the benefit from store refreshment and refurbishment? Now you have quite a large part of the footprint refurbished. Can you tell us before versus after what improvement you've seen, firstly? Secondly, the 20% EBIT margin target this year at FY 2020 constant currency or FX, can you tell us how that translate into reporting margin this year, factoring in the new headwind from FX? If you could give us the same indication on gross margin, given, if I'm not mistaken, you're planning on 70% at last year's foreign exchange. This year, what that means, factoring in the new, the new headwind on FX.
Lastly, just furthering on what you literally have just said on the European cluster. If the European cluster is slightly down, and the American cluster is slightly down as well, and the Chinese will normalize in Q2, given the harder comparison base, where does that leave Q2 in terms of comp store growth? Is mid-single digit a fair estimate? Is that the ballpark, or is that too exotic? Thank you.
Thanks, Thierry. Yes, the benefit of the stores, clearly we're in the midst of our store refurbishment program rollout. We completed around 30% of the network by the end of FY 2023. We aim to be around 50% at the end of this year. Obviously, we're monitoring performance of those stores. The data that we have at the moment indicates higher AUR product being sold, higher productivity in those stores of around mid-teen. That's a great response.
As the rollout continues, we'll keep an eye on those metrics, but we hopefully will continue to see the performance improve, particularly as the stores are better laid out for accessories, which you know is part of our strategy as the goal to grow that category to 50% over time, and the stores sort of lend themselves to that. Great to see that productivity increasing and the return on that investment coming through. In terms of margin, yes, quite right, 20% operating margin at FY 2020 CER. I haven't reported, I think there'll be a headwind to that. I think Julian will probably follow up with you on that. Julian, do you have that?
Yes, it's 20 basis point headwind against FY 2020 FX.
Yeah. 20 bits, Thierry.
Thank you.
Gross margin, we're calling it as around 70% on a reported basis, so a little ahead in terms of CER basis. In terms of the cluster, if I follow your question, yeah, EMEA cluster down, low single digit, Americas down, low single digit as well, and Chinese obviously accelerating on a last off year basis from +11% Q4 to +15% in Q1. I think that's the balance that makes up your comp for this quarter. Was there anything else you needed on that?
No, no, the idea was moving towards Q2. If the Europeans and Americans trend don't change much.
The Chinese, moderate considerably, given the comparison base, where does that leave the potential for comparable store sales in the second quarter?
Well, Q2, as you know, is a tougher comp for us, given that China was open. We'll see that pattern of tougher comps in Q2 and Q4. It's a bit early to call where we're going, given it's the second week in on Q2. Look, we're monitoring the performance of all regions and all clusters. I think what we're seeing is the Q1 results, you know, being pretty strong for us, and we're happy with the + 18. We'll just update you on Q2, of course, at the half year.
Okay. Thank you.
Yeah, as I said, Thierry, we are maintaining our full year guidance, and that full year guidance obviously requires Q2 to see positive development. Don't forget that although China itself, the Chinese cluster was up mid-teens in this quarter, and that's going to be a factor in our next in Q2 as well.
Okay. Okay, maybe just an interested follow-up, you said mid-teens benefit from refurbishment, if I heard well. Is that in line with your expectations? I suppose this is factored into the over 20% EBIT margin you want to reach within a few years. Is that, are you pleasantly surprised, or is that pretty much in line with what you expected?
We set out, if you recall, Jonathan set out in November that the productivity for the midterm we were aiming at GBP 25,000 per square meter. We are pleased with the progress we're making against that target, in particular in the new refurbished stores. We are on track and hit that medium-term target.
Okay. Thank you.
Thanks very much, Thierry.
The next question comes from Antoine Belge from BNPP. Your question, please.
Yes. Hi, good morning, it's Antoine Belge, BNPP by Exane. The first question is actually a follow-up, and I'm sorry to be pushing a bit further. On the cadence of the Daniel Lee product, if I understood, so for a customer to get into a Burberry store and find more than half of the product, you know, I mean, designed by Daniel, you know, from the qualitative comments you made, I understood it was maybe the January to March quarter. You're, is that a fair comment, or is that going to be a bit later? My second question is on the underlying OpEx guidance at constant currency.
Um, I, I did a, a bit of a math, and, uh, uh, for me, it's, it's, uh, you know, um, a-around high single digit, but more like nine, uh, nine percent. Um, so i-is that a fair comment? And it, it's, uh, something that is a bit different from what, um, uh, Jonathan told us, uh, maybe when he joined, and, and, i-i- maybe that's an acknowledgement that, uh, companies like LVMH are, uh, for instance, are i-investing heavily and, and, you know, to support the, um, you know, the efforts of Daniel Lee, you need probably a bit more, um, marketing support. Um, uh, and maybe a fi-final question about, um, what, what you've seen, um, i-i-i-in China.
I really want to see if in the sort of exit rate, you basically saw, you know, the China numbers, you know, maybe slowing a bit, but that was more than compensated by an acceleration in tourism.
Thanks, Antoine. Yes, if it's come back on Daniel's collection. The only thing that's gonna be in store from September is Winter 23 runway as part of the Autumn/Winter collection overall. If you think of the newness, then Daniel's collection is around 30% of the newness that's gonna be in store from September. You will scroll forward to Spring/Summer, which Daniel's responsible for all of, which is, again, about 50% of the total product offer, the other 50% being core and replan. That will roll into stores from December onwards. We're not gonna give you month-by-month percentages, Daniel's, because the core offer is still really strong. This is different to when Ricardo took over from Christopher.
It's a strong core offer, a strong replan offer, with the newness layering in over top over time. The transition will take three seasons to get through. Again, really excited to have the winter runway in store in September. There's some pre-order on selected looks going on in Bond Street and indeed, another set in Asia at the moment. The response to the new product has been really strong. We're looking forward to and anticipating the response to the broader Autumn/Winter collection as it hit stores from September onwards. That's the cadence we're looking at, without actually giving you a sort of exact point in time as to when it's gonna be 50% annual. OpEx, I think.
Yes, we are investing behind the business. We've got OpEx growth underlying at around 9% overall, with inflation built in and running at about 5%. The investment's important. Now, you raised that. We are investing behind the business. You'll see us invest behind the product launch in September, of course, and we're starting from now. The Autumn/Winter campaign for 23 has launched this week. You'll see us amp up the communication throughout this month and beyond, ahead of the launch, through all media channels. Then we've got some very interesting activations going on, big activations going on, to get behind the product into Q3 and Q4. Some great stuff to come. We, as you know, spend around a high single-digit percentage of sales against marketing and VM.
We're at the sort of higher end of that number to ensure we put the optimum amount of marketing spend behind the product launches. We're looking forward to that to come at the back end of Q2 and into Q3. On China numbers, I think you're right to call out the tourist rate is really driving the Chinese cluster here, the nearshore tourism in particular. Japan is +44%, driven in part by Chinese tourists, the Chinese tourists are also driving growth in Hong Kong and Macau and other parts of South Asia Pacific. We've said that they're not so prevalent in EMEA just yet. There is an increase in Chinese tourism into EMEA. It's gone from about 2%-3% last year to 8% in Q1.
Again, we're not embedding significant recovery of the Chinese tourists in EMEA just yet. We'll see how that evolves, particularly over the summer. You know, we're pleased with the acceleration in Chinese cluster from Q4 last year, at +11%, to Q1 at +15% this year against last year. That's a good recovery. Chinese overall, around 32% of our business, pre-COVID, 39%. You might imagine there's some way to go. We're sort of pleased with exit rates coming out of Q1, and we think that recovery will continue back towards the pre-COVID levels.
Let me just. From what you said about again, that cadence of Daniel Lee's product. If I understand well,
should not just focus on his impact on the newness, but also on the replenishments, where he already has sort of tweaked a few things.
Good. The newness versus replenishment, being around 50/50, the split, is that what you're after?
No, no, more like, again, the influence of Daniel.
Yeah. Okay.
Maybe the wrong way would be just to think about his impact on the new products.
Daniel's influence will be across, you know, the pre-collection and the collection. He's responsible for all newness coming through from this point on. Again, he only arrived to be influential and driving the winter 2023 runway. Autumn/winter 2023 is part core collection carried forward, plus Daniel's runway for winter 2023. Spring/summer 2024, newness is all Daniel. That's what we're arriving in the stores from December onwards for spring and then into the new year for summer. That has been, I'd say, well received as a pre-collection, and the order books are completed for spring.
We'll finish the spring/summer order book, post the runway show for summer in September, then we'll have the spring/summer, as I say, in the stores from December onwards. That's the cadence of how we're introducing Daniel's collections, you know, through back end of this year into next year. Of course, in autumn/winter 2024 will be all Daniel as well.
Yeah. Well, thanks for the, you know, the clarification, and I'm sorry for, you know, sort of.
No, no, it's okay.
asking so many question on that topic. Thank you very much.
All right, Antoine, thank you.
The next question is from Louise Singlehurst from Goldman Sachs. Please go ahead.
Hello, Louisa?
Your line is open. Maybe unmute from your side.
Louise, we can't hear you.
We'll move to the next question. Maybe Louise can join us again. The next question is from Charles-Louis Scotti from Kepler Cheuvreux. Please go ahead.
Hello, thank you very much for taking my questions. I have two actually. The first one on leather goods. The business was up 13%, which is slightly below the rest of the business. Is the leather goods performance broad-based across all geographies, or is the category momentum much better or much weaker somewhere? Especially if you could comment on how the leather goods business is doing with Chinese customers. My second question, you mentioned that you reopen your Bond Street flagship store. Can you tell us how meaningful it is in terms of total sales in the UK or EMEA region? You said that you opened a brand-new VIP area. Do you plan to do the same across all your flagship stores going forward?
How successful have you been so far in attracting top spenders? Thank you.
Quite right, Charles Louis, that leather goods up 13% for Q1. Good performance of particularly the Frances shape and the Vintage Check lines in bags generally. Leather goods is broad-based. I think we've got our lead lines and lead shapes as you've seen them for a while now. The TB hardware, particularly the Lola, proving strong for us, Frances, as we said. The Chinese is similar. The growth in China, in leather is a similar level. Bags are certainly as a proportion increasing at a greater rate than the general offer in China, so that was pleasing to see. On leather, there's so much more to come as Daniel's collections roll out.
We're very excited about his new shapes. They are certainly a part of the pre-order collection that are sitting in Bond Street and indeed in Asia at the moment. Lots more to come on leather goods. In terms of Bond Street and U.K. Yes, the U.K. I think is a little bit behind in terms of growth rate relative to Continental Europe. It's obviously our home territory, and we want to see that performing well. The VIP area you mentioned, obviously, that has been introduced in the new format store in Bond Street, and that's driving great interest and engagement with our VIP clients. That will be a part of our bigger stores for sure.
That's just an important area for us to build on, and certainly one of our focuses is gonna be on that VIP client going forward, an important build for us as we introduce particularly the new product coming through from September.
Thank you.
Thanks, Charles.
We have Louise back. Hopefully, we can hear you. Please go ahead.
Morning, Ian and Julian. Sorry about that. You're very kind to let me back on. Two questions from me, if I may. Just on the outerwear, so up 30% in the prior quarter, 36% this quarter, and of course, this is before we really get the new content coming in from Daniel Lee. Can you just tell us about the cohort mix? You know, again, is this new customers coming to the brand? Is it re-energizing the existing kind of customer cohort already within the CRM system? I'd be really interested to hear about just that dynamic. The second question I had, just back on the U.S., is there anything that you can help us understand, just the operating environment? Is it Obviously, it's very similar to the prior quarter, -7%, goes to -8%.
Is it traffic versus conversion? Is traffic just a lot more lumpy week on week? Has there been any particular change going towards the end of the period, i.e., any implications that we should be considering as we go into the next quarter, or this current quarter, I should say? Thank you.
Thanks, Louise. Thank you. On outerwear, we're really pleased, obviously, the +30s, you're saying in Q4 last time, +36 this time. It's really, we're harking back to, you know, Daniel Lee's first influence on his take on the aesthetic and brand, that one relaunch in February, where he dressed various talents in London, and that campaign really did resonate. It carried through also to the runway show in February, where again, local and international talent were dressed in trench. The outerwear is really driven by rainwear, and rainwear is driven by heritage rainwear, and there's an equal response from new and repeat customers there, as we've seen coming through, not only at Q4 last year, but into Q1 into this year.
We've really got a strong pickup there, and it's been an excellent driver, and it just shows us how the strength of Daniel's input into any area of our business really drives our business for us, and that was a great outcome. That was outerwear. U.S., yes, sort of -7, -8 patterns for Q4, Q1. The operating environment is tough. I think we are getting good traction with higher net worth individuals relative to the aspirational. We're getting good traction on leather and outerwear, as we just mentioned. They're the strength in categories as they are globally, actually. In terms of traffic, it's a little bit offset. It's a bit lower. We have to say conversion's okay, traffic is down in the U.S.
Of course, that's partly to do with the softening of the aspirational customer. We look to rebuild there. We are investing in the U.S. We are certainly progressing with the store refurbishment. We opened 6 in quarter one. We're trying to get the target is 40% of the Americas network done by the end of the year, that's quite an acceleration in the U.S. We're gonna be investing in temporary stores, pop-ups, pop-ins, activations to support the launch of product. It's a really important market for us, and we're confident that's gonna come back to us as we go through the rest of the year and indeed with the new collection. We'll look forward to in the U.S., that's the pattern at the moment.
Thank you. Can I just ask one last one, as annoying analysts always have three questions. Just whilst I think about it, the marketing expense, I think you mentioned, is tracking around the high single-digit % of sales at the moment.
Yes.
When was it last at that top end of the range, and has it ever been double digit historically? Thank you.
We'll have to do a bit of digging for you on the history when it was this range, but we do generally say high single digit. I mean, like if you go 7-9, high single digit is where we are. I think last year we would have been a bit lower compared to where we're going this year. Of course, it's really back-end weighted this year as we support the products being launched in the store from September. You'll see us very active in the market. As again, I said, we've launched Autumn Winter 23 campaign this week. The noise levels and the engagement levels will have been rising through the next couple of months ahead of launch. Very active, back-end weighted, but the upper end of high single digit for this year.
Very clear. Thank you.
Thanks, Louise. Thank you.
The next question is from Rogerio Fujimori from [Burberry]. Please go ahead.
Hi, Julian, I have two questions. One is about shoes. I think any comment in terms of recent trend and what you expect from Daniel, given his track record at BV? I think you talked about his new bags coming in September. Anything to flag on shoes? You could say a word about the comps growth for scarves and other carryover products, excluding bags. In terms of halo effect from Daniel's campaign on outerwear, would be great. Thank you.
Thanks, Rogerio. Thank you. Yes, shoes remains a great opportunity for us. I think if you hark back to Jonathan's statement on medium-term targets, obviously, shoes was more than doubling. I think we see huge opportunity there with the combination of both Daniel and Jonathan, who built shoe categories before and been very successful. We're soft at the moment on shoes, of course, because the new collection aren't in. I've seen the shoes available that are coming through in autumn, winter, and they look great. There's a much fuller offer across, you know, formal, informal, and importantly for us, as an outerwear brand, we have shoes for outerwear, which is gonna be fantastic.
We see great opportunity there, and that medium-term target of more than doubling shoes, I think, is within our reach and remains our focus. Shoes is a great opportunity. It's soft at the moment, we are gonna come back strong when those collections are in store. In terms of scarves, we've seen a really positive response more recently. They picked up, we're in the + 20s on scarves. I think it's, as we come back, we think that's partly to do with increased tourism and gifting. When tourists travel and looking for a gift, they go for scarves, there's been a great pickup with around +20% in Q1. EMEA is probably doing the best, followed by China, and Japan is doing well as well.
Across the board, that particular category is doing very well. It, it dials into course a bit of the outerwear and out righteousness that's really important to us, and that's being picked up at the moment. Yeah, we're very pleased with that.
Thank you.
Thanks, Rogerio. Thank you.
The next question is from Liwei HOU from CICC. Your question, please.
Good morning, everyone. Thank you, Ian and Julian, for taking my questions. I've got three. The first one, so to come back on the clusters, if we compare the past quarter versus the same quarter in 2019, before COVID, what would be the growth for different clusters, including American, European, and Chinese? So that would be the first question. The second one is to drill a little bit further on Chinese performance. Mid-teens growth is quite good, and could you break down to traffic and conversion and ASP? Because I'm getting mixed signals in China, especially on foot traffic. If you could help clarifying on the, you know, drivers in China would be really helpful.
The last question is on our full year guidance, you know, low double digits. Could you break down by volume and price, and especially within the price, how much will be our like-for-like price hike, and how much will be, you know, launch of newer products, selling at a higher price point? Thank you very much.
Yes, thank you, Liwei. Thank you. Harking back to 2019, sort of pre-pandemic, as I said, all clusters are up double-digit, actually. We even show strength in Americas, as well as EMEA and the Chinese. It's been positive for us, and it is good to make that comparison, as you say, to pre-pandemic, you know, because that's really like for like, but we're up double digits across all of them, which is great. Just to give you a little bit of insight, we're around 20% in Americas and around 30% in China. That's very positive for us.
In terms of China and traffic, I think in the quarter, don't know, Julian, if you got specific numbers, but we're pleased to see the continuing recovery with Chinese overall. Traffic's very high with the tourist element. The local, I think, is probably down relative to the tourist, we'll get some insight for you on that with the follow-up call, I suspect. AUR, as I said, they're ticking up very nicely across the world, and particularly in China, and with the Chinese, both locals and tourists. The AUR pick up really driven by leather and outerwear as the drivers there, and AUR will be up double-digit in terms of where we are versus same quarter last year.
The guidance, low double digit relative to FY 2023, quite right, that's where we're heading. I think volume and price is probably split equally in terms of driving that growth for this year relative to last, that's the balance that we're looking at at the moment. We won't offer particular splits there, but that's a rough guide to how that growth is made up.
Very helpful indeed. Thank you very much.
Okay, thanks, Liwei.
The next question is from Luca Solca, from Bernstein. Your question, please.
Yes, good morning. Thank you for taking my questions. My first question is on whole price progression. The reason I ask is that in our store checks, we found quite a significant amount of promotion pressure, soft promotions, I mean, in full price stores, especially in China, as seemingly there was an effort to exit the Riccardo Tisci's collection. I wonder if you would confirm that promotions have been more important than usual in your growth this quarter, and if you anticipate that as you shift towards Daniel's collection, the promotion intensity will reduce? The second question is on the appetite of Chinese consumers for products other than the trench coat and the check pattern.
In our field research in China that we just carried out, there seems to be a very high appreciation for your core iconic products, especially the trench coat and the check as important elements of the Burberry's DNA. I wonder what kind of pick up you are recording when it comes to introducing new product categories and most importantly, leather goods and footwear, and if you'd say that the Chinese nationality is at the forefront or behind the curve in picking up those products. I understand you were singling out the high-end American consumers as being on the front foot on this front, so I was just wondering about that. Maybe as a third question, and just for clarification, we've been talking a lot about nationalities today.
I wonder if you could give us your sales mix by major nationality, how much is going to American, European, Chinese, and Japanese consumers, if you could? Thank you.
Sure we can. Thanks, Luca. On the full price progression, obviously, we're not breaking out full price these days because we're sort of beyond the point of where we removed markdown in FY 2022. You recall that was a strategic step taken by Marco and Julie to take markdown out of our offline and online channels. I think there are still a very small proportion of private sale items that go out to selected clients, but it's a very minimal part of the business. We'll follow up with you in terms of what you were picking up in China. I know you just have done those store visits out there.
Obviously, with Daniel's product coming through, that's gonna be a strength for us in terms of full price business, both offline and online, and as I say, that's gonna be rolled out from September, so we're looking forward to that. Those price points will be a degree elevated from what you've seen before. In terms of the China consumer, yeah, we're obviously very pleased with the performance in leather and outerwear, and of course, they're very keen on our iconic coats and products, trench and check going very well. Jonathan was actually out in China maybe three or four weeks ago, visiting around about 30 stores, visiting staff in head office there as well. There is a high degree of anticipation for what's to come.
I think the Chinese people are very well aware of their brands and their designers. They're very familiar with Daniel Lee. They know him by name, and they're looking forward very much to receiving his product. I think we've got great expectations for the performance we're going to have in China with the new collections as they come through from September. We mentioned shoes a little bit earlier as to what an opportunity that is for us, and indeed, in leather with the bags coming through as well. There is a pre-order selection of the looks out there in Asia at the moment. We're getting a very positive reaction from those to go alongside our very strong core offer as well.
A lot of excitement to come with not only continuation with the iconic products that we have, but also with the new come, particularly dialing in the Britishness into the new collection. Lots to come there. In terms of the clusters and sales mix, nationality-wise, we can get those numbers. We've got China roughly at around 30% of our business. Chinese, I should say, roughly around 30% of our business. EMEA will be around high 20s, I think, and then Americas lower 20s, so at the moment for Q1, but that's. We'll follow up with you to get the precise numbers when we have a call later with Julian and Lauren.
Wonderful. Thank you very much indeed.
Thank you. Thanks, Luca.
This concludes our question-and-answer session, and I will turn back to Ian Brimicombe for any closing comments.
Thank you very much, operator. Well, thank you, everybody, for joining the call and for all the questions. We hope we've covered the ground and give you a good flavor of how our performance has progressed in Q1. We're very pleased with a good performance, and obviously, we've reiterated guidance for the full year. With so much to look forward to with this brand, through Daniel's collections coming in September, both offline and online, so we look forward to that and updating you at our next call for the interims in November sixteenth. Of course, Kate Ferry will be our new CFO at that point. She's joining actually on Monday, so we look forward to welcoming you to the interims call then. Well, in the meantime, I wish you a very good afternoon. Thank you.
Ladies and gentlemen, this concludes today's conference. Thank you very much for joining, and have a pleasant day. Goodbye.