Burberry is looking to rekindle the spark under a new leadership duo

LONDON, November 16 (Reuters) – Burberry’s (BRBY.L) New chief executive Jonathan Akeroyd will outline his plan on Thursday to finish the job started by his predecessor: bring the British luxury brand’s growth to the level of its European rivals.

Akeroyd, who took over in April, will present his strategy along with first-half results that will show the lingering impact of lockdown restrictions in China, Burberry’s biggest market.

He has already made his key appointment by choosing Daniel Lee to replace Riccardo Tisci as the 166-year-old brand’s chief designer.

Burberry has lagged rivals like Gucci, Prada and Loewe in building a sharp brand in recent years and Lee will play “an important role in the renewed interest”, said Mario Ortelli, managing partner at the firm of consulting Ortelli&Co.

Lee, who was previously at Kering (PRTP.PA) Bottega Veneta should focus on bolstering its runway, streetwear and menswear collections to appeal to younger consumers, Ortelli said.

This group is expected to support the growth of the sector in the coming years with purchases made from 15 years, according to sector forecasts from consultancy Bain published on Tuesday.

Burberry is also expected to expand its leather goods and footwear businesses, Ortelli said. Leather goods account for around 20% of Burberry’s sales compared to 70% at Bottega Veneta.

The company’s former chief executive, Marco Gobbetti, laid out a plan in 2018 to firmly reposition the brand, known for its camel, red and black checks, in the luxury segment.

It raised prices, limited distribution to its own high-end stores and department stores, and reduced discounts. Tisci, in turn, changed Burberry’s design language by introducing a TB monogram, which increased the brand’s appeal to young luxury consumers.

The final stages of Burberry’s five-year plan were expected to see accelerating revenue growth and rising profits. But the COVID-19 pandemic has thwarted that goal, with store closures and travel restrictions preventing tourists from Asia and elsewhere from spending in Paris and London.

CREATE A BUZZ

The label posted a 1% increase in same-store sales during its quarter ended July 2.

Burberry’s rivals – led by French luxury leaders LVMH (LVMH.PA) and Kering (PRTP.PA) – on the other hand, recently recorded double-digit sales growth in the quarter ending at the end of September.

LVMH’s fashion and leather goods division, home to Louis Vuitton and Dior, saw sales rise 22% on a like-for-like basis, while Kering’s sales rose 14%, although revenue from its star brand Gucci rose 9%, missing market forecasts by 11%. .

Akeroyd and Lee will seek to emulate the feat of Gucci CEO Marco Bizzarri and creative director Alessandro Michele, who set a pattern for creating buzz at well-established luxury brands, nearly quadrupling their profits between 2015 and 2019.

Lee’s appointment could signal a reassessment of Burberry’s British heritage, according to Lydia Slater, editor of fashion magazine Harper’s Bazaar.

“Lee’s interpretation of this heritage is probably the opposite of convention, given the iconoclastic manner in which he transformed Bottega Veneta from an understated luxury brand into a cult, directional brand,” he said. she declared.

The Bradford-born designer rose to fame for reinvigorating the Italian brand by exploding its famous “intrecciato” weave into bags and shoes and creating one of the most popular colors of 2021, dubbed “Bottega Green”.

Akeroyd has a proven track record of turning around established brands such as Alexander McQueen and Versace, analysts say.

“Over the long term, the brand’s revitalization should help retain fashion fans and the increasingly coveted Burberry products,” said Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown.

Reporting by Suban Abdulla; Editing by Paul Sandle, Matt Scuffham and Mark Potter

Our standards: The Thomson Reuters Trust Principles.

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