Burberry’s sales were down one per cent last year. Pre-tax profits grew five per cent and its operating margins were at 15 per cent. Burberry is known for its trademark check fabric. The 160 year old British luxury brand still concentrates on check tartan outerwear, but its luxury range includes perfumes, watches, eye wear and leather handbags.
The group has over 400 stores worldwide, half in emerging markets. Moving into leather goods has attracted some attention as it wants to turn from one known for its outer wear into a broad luxury brand. Selling more bags is part of its plan for a number of reasons. Bags offer higher margins, require less selling space and no changing rooms. As part of its strategy Burberry has acquired CF&P, an Italian leather supplier. In Burberry’s case, leather goods account for only one-fifth of its sales.
Burberry is also rationalising store space, investing in technology and reducing costs. The coming years will see store reductions but stores will also be upgraded. The group is embracing technology, having struck a deal with online fashion retailer Farfetch as a one-stop shop for its high-end brands in southeast Asia.
