Questions remain as Burberry awaits half-year results

CGTN Europe

It's a world-renowned luxury brand, distinctively British – but its image has fallen victim to its own popularity. CGTN’s Catherine Drew reports.  #burberry #fashion  Read more 👇  https://tinyurl.com/3zkha453

Transcript

00:00Textile apprentice Thomas Burberry opened his first shop in 1856 at just 21 years old.

00:07His invention of water-resistant gabardine revolutionized outerwear and gave us the trench coat,

00:13so named because it was worn by soldiers in World War I.

00:17Since that time, the company has gone on to become a worldwide luxury brand,

00:21trading on its sense of Britishness.

00:23But its image has also fallen victim to its own popularity.

00:28When you think about luxury, generally the consistent opportunity is exclusivity.

00:34And what we've seen with the Burberry brands now, particularly in the noughties and nineties,

00:40but certainly more recently as well,

00:42is when it dips into areas where it becomes almost of mass appeal,

00:48whilst it might impact sales very instantaneously,

00:52it then has a challenge for the legacy of the brand.

00:55Like many luxury brands, Burberry has endured stormy weather in recent times.

01:00In July, it reported a 22% year-on-year slide in first quarter sales.

01:05This prompted the company's second profit warning this year,

01:08a suspension of the dividend and an announcement of UK job cuts.

01:13Meanwhile, the share price has fallen around 50% across the year,

01:17prompting its exit from the FTSE 100 index in September.

01:22Perhaps in a bid to recapture the previous cool Britannia heyday of the late 1990s,

01:27Burberry has recruited well-known British celebrities,

01:30along with Chinese actor Zhang Jingyi as ambassadors.

01:34But some question the tactic.

01:36It's not going to make me buy a coat or a scarf.

01:40It's all well and good picking out icons,

01:42but what's the strategy behind it and how do you convert that into sales?

01:46Sales which are down across the world,

01:48including in China.

01:49This used to be a territory where perhaps brands could just almost rest on their laurels,

01:53particularly when I was trading 20 years ago there.

01:56You know, we could bring British heritage in, put a union jack on,

02:00and therefore, you know, hey, presto, we were delivering on our promise.

02:04But this is much more of a transient, opportunistic, social media-focused market

02:11where absolutely it's got to be relevant to the world.

02:16It's got to be relevant to young people and Burberry loyalists in China

02:23who aspire to the brand and wear their visions.

02:26Some analysts have suggested Burberry should close its profitable outlet stores,

02:30which serve as a disincentive for customers to pay full price.

02:34I think you'd need to look at how much surplus you're creating within your supply chain

02:38because clearly that's a problem if you've got that many outlet stores.

02:41The cost of living crisis has impacted the luxury sector as a whole,

02:45but Burberry has underperformed its peers.

02:48Now, many are looking to see if the new leadership will take the company back

02:52to its traditional heartland to regain its place as a global fashion powerhouse.

02:57Catherine Drew, CTTN, London.

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