Magazine article Marketing

Brand Health Check: Fashion - Burberry in the Trenches

Magazine article Marketing

Brand Health Check: Fashion - Burberry in the Trenches

Article excerpt

Did the stock market overreact to a slide in sales, asks Kim Benjamin.

Luxury fashion house Burberry, founded in the 1850s, has garnered its fair share of attention of late, both from fashionistas and investors Its colourful spring/summer 2013 collection, unveiled at this month's London Fashion Week, included outfits in raspberry pinks and emerald greens, and was the talk of the town. Its previously stellar performance off the catwalk, however, has lost some of its sheen of late.

Earlier this month, the company's stock price plummeted by nearly 21%, after it revealed that a flat period of sales had been followed by a decline in the past few months, with profits expected to come in at the bottom end of current forecasts. This is in marked contrast to the 6% hike in sales it reported for the first quarter to 30 June, and is the second time in less than three months that Burberry has reported a slowdown in growth.

Its latest profit warning coincided with the opening of a new, digitally enhanced 44,000ft2 flagship store on London's Regent Street. The brand has been at the forefront of integrating digital innovation with its business.

Not surprisingly, Burberry's warning had a knock-on effect on other stocks in the fashion and luxury sector, and analysts have highlighted that luxury brands are now struggling to cope with the continuing difficult economic conditions.

Burberry's chief executive, Angela Ahrendts, acknowledged that the business environment was 'becoming more challenging' - so what are the implications of Burberry's expected slide in earnings? We asked James Bidwell, marketing director at Cass Art London, and previously managing director of Anthropologie Europe and marketing director at Selfridges; and Clare Cryer, managing director at Integer London, the shopper marketing arm of TBWA\Worldwide.

BURBERRY STATS

Burberry has 196 retail stores

The company posted a 24% surge in annual profits to pounds 336m in its last financial year, driven by strong growth in key Asian markets

Source: Burberry

DIAGNOSIS - Two industry experts on what Burberry can do to strengthen its consumer and market appeal

For pounds 1.3bn to be wiped off the value of a business as a result of 10 weeks flat like-for-likes and a slight decline in sales for two weeks says more about the stock market than the business.

Burberry has enjoyed a rise in brand recognition, sales and profitability over the past 10 years. …

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