By Robert Williams
(Bloomberg) -- Burberry Group Plc is teaming up with Chinese internet giant Tencent Holdings Ltd. to experiment with blending retail and social media in the key luxury market.
The move came as Burberry reported six-month earnings that beat estimates, helped by demand for designer Riccardo Tisci’s new look for the brand. The shares rose as much as 8.5%, the most since July.
The first step in the alliance will be Burberry opening a store in Shenzhen powered by technology from Tencent, which operates the social network WeChat as well as payment and gaming apps. The space will offer “unique experiences that connect luxury customers’ social and online lives to their physical environments,” the U.K. luxury-goods maker said.
“Social media is becoming such an important part of the luxury customer journey, particularly in the inspiration phase,” Burberry Chief Executive Officer Marco Gobbetti said in a statement. “Retail needs to keep pace with this.”
Burberry hired Tisci, a veteran of LVMH’s Givenchy brand, in March 2018. The U.K. company said his designs delivered double-digit growth in the latest period, with his products now representing about 70% of the mainline retail store offer.
Tisci, who took over from longtime creative chief Christopher Bailey, has also given the staid trenchcoat maker more digital buzz with streetwear-inspired “drops” of time-limited collections.
Consumers who are determined to keep up with online influencers are driving growth in makeup, fashion, fine dining and travel. To lure them into stores, retailers have been deploying unique backdrops for photos, including murals, giant mirrors, majestic stairwells and art installations.
With popular social networks like Facebook Inc.’s platforms including Instagram banned in China, a deal with Tencent can help bolster the brand’s visibility in that market.
The move comes as luxury brands are taking a hit to sales from the continuing anti-Beijing protests in Hong Kong. Burberry said sales declined by a double-digit percentage in the territory in the latest period.
Elsewhere, the company did better, and adjusted operating profit rose to 203 million pounds ($260 million) in the six months through September. Retail sales rose 4% on a comparable basis, matching estimates.
© 2019 Bloomberg L.P.