Burberry’s new top team seeks growth in return to ‘Britishness’

Bloomberg

Burberry Group Plc’s new leadership plans a return to “Britishness” after a revamp by an Italian executive duo failed to keep the UK brand abreast of its luxury rivals.
The new team of Chief Executive Officer Jonathan Akeroyd and creative chief Daniel Lee want to increase accessories to more than 50% of sales in the long term, banking on high-margin products in their overhaul of the trench-coat maker.
Comparable store sales rose by double digits in the three months ended in September as American tourists took advantage of the strong dollar to snap up luxury goods in Europe. Still, growth fell short of the high bar set by rivals such as LVMH SE and Hermes International.
Akeroyd will provide more details of his new strategy. In a first step towards shaking up the brand, the Versace veteran in September named Lee to succeed Riccardo Tisci as creative director.
Akeroyd succeeded previous CEO Marco Gobbetti, who was mid-way through an effort to take the Burberry brand further upmarket when he left to head Salvatore Ferragamo SpA.
Lee was previously head designer at Bottega Veneta, where he helped reinvigorate Kering SA brand before leaving for undisclosed reasons a year ago. He is due to present his first collection for Burberry during London Fashion Week in February.
Among a slew of new goals announced, the UK firm said it’s now aiming to generate £4 billion of sales in the medium term and hopes to add another £1 billion in the long term.
To do so, it plans to roughly double sales of leather goods, shoes and women’s ready to wear, as well as grow outer wear by 50% in the medium term. It will also seek to boost the share of e-commerce to 15% of retail sales over that time frame.
The new strategic plan comes as the outlook for the global economy darkens. UK inflation hit the highest level in more than four decades last month on soaring energy prices, figures Wednesday showed.
There are signs of faltering demand, especially for lower-priced luxury products in the US. Revenue in the Americas fell 3% in the quarter, following a 4% drop in the preceding three months, the company said.
“Burberry is one of the most exposed brands to aspirational consumers,” Luca Solca, analyst at Sanford C. Bernstein wrote by e-mail. “Aspirational consumers are far more exposed to energy and food price inflation, as they have a more limited discretionary spend capacity. Hence the weakness,” he added.