LONDON: Burberry’s new chief executive, Jonathan Akeroyd, will lay out his plan on Thursday to finish the job started by his predecessor: boost the growth of the British luxury brand to catch up with its European rivals.
Akeroyd, who took over in April, will present his strategy alongside first-half results that will show the continuing impact of lockdown restrictions in China, Burberry’s biggest market.
He’s already made his key appointment by choosing Daniel Lee to replace Riccardo Tisci as chief designer of the 166-year-old brand.
Burberry has lagged behind competitors like Gucci, Prada and Loewe in creating a clean brand in recent years and Lee will play a “significant role in reigniting interest,” said Mario Ortelli, managing partner at advisory firm Ortelli&Co.
Lee, who was previously at Kering’s Bottega Veneta, should focus on strengthening his runway, streetwear and menswear collections to appeal to younger consumers, Ortelli said.
That group is expected to fuel the growth of the sector in the coming years with purchases made from the age of 15, according to industry forecasts by consultancy Bain published on Tuesday.
Burberry should also expand its shoe and leather goods business, Ortelli said. Leather goods account for about 20 percent of Burberry’s sales to Bottega Veneta’s 70 percent.
The company’s former chief executive, Marco Gobbetti, laid out a plan in 2018 to reposition the brand, known for its camel, red and black checks, firmly in the luxury segment.
He raised prices, limited distribution to owned stores and high-end department stores, and cut discounts. Tisci, in turn, changed Burberry’s design language by introducing a TB monogram, which increased the brand’s appeal to younger luxury consumers.
The final stages of Burberry’s five-year plan were expected to see an acceleration in revenue growth and a rise in profits. But the COVID-19 pandemic thwarted that goal, with store closures and travel restrictions preventing tourists from Asia and elsewhere from spending in Paris and London.
CREATING A BUZZ
The label achieved a 1 percent increase in comparable store sales in the quarter ended July 2.
Burberry’s rivals, led by French luxury leaders LVMH and Kering, by contrast, recently reported double-digit sales growth in the quarter through the end of September.
The fashion and leather goods division of LVMH, home to Louis Vuitton and Dior, reported a 22% rise in sales on a like-for-like basis, while sales at Kering rose 14%, though revenue from its flagship Gucci brand increased by 9%, below market forecasts. of 11 percent.
Akeroyd and Lee will seek to emulate the feat of Gucci chief executive Marco Bizzarri and chief creative officer Alessandro Michele, who set a template for building excitement at well-established luxury brands, increasing profits nearly four-fold between 2015 and 2019.
Lee’s appointment could signal a reassessment of Burberry’s British heritage, according to Lydia Slater, editor-in-chief of fashion magazine Harper’s Bazaar.
“Lee’s interpretation of that heritage is likely to be the opposite of conventionality, given the iconoclastic way in which he transformed Bottega Veneta from a low-key luxury brand into a cult directional label,” he said.
The Bradford-born designer became famous for reinvigorating the Italian brand by exploiting its famous “intrecciato” fabric on bags and shoes and creating one of the most popular colors of 2021, dubbed “Bottega Green.”
Akeroyd has a history of turning around established brands like Alexander McQueen and Versace, analysts say.
“In the longer term, the revitalization of the brand should help keep fashion fans loyal and Burberry products will become increasingly coveted,” said Susannah Streeter, senior market and investment analyst at Hargreaves Lansdown.