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By Mimosa Spencer
PARIS (Reuters) -The slowdown in the luxury market following a post-pandemic boom could not come at a worse time for Burberry, with designer Daniel Lee's first styles for the British label trickling into newly refurbished stores.
Executives cautioned on Thursday that they would struggle to meet Burberry's annual revenue forecast, pointing to a darkening macro economic climate across the globe and capping off a tumultuous reporting season for the sector.
Shoppers in the United States and Europe have grown cautious about splashing out on high-end purchases as the cost of living rises, while appetite in China has been deflated by a property crisis and record youth unemployment.
Burberry is in a "particularly difficult position", compared to peers, said analysts at JPMorgan, citing the difficulty of shifting the label's image upmarket when shoppers might be pickier about what they buy.
With fewer shoppers heading to Burberry stores, clinching a sale will be key. "The challenge here is conversion", said Chief Executive Jonathan Akeroyd in a call with analysts, adding that the brand would have to work particularly hard on increasing the number of shoppers who make a purchase as the industry grapples with lower footfall.
"That's really what we're focusing on," said Akeroyd.
For Burberry, the challenge has steepened.
The company is undergoing an aesthetic overhaul aimed at stoking interest in the brand with better quality, higher priced products, such as the 2,890 pound ($3,582) medium-sized "Knight" bag.
It has been refurbishing stores at breakneck speed, opening more than one a week or 33 in the first half of the year in places like Los Angeles, Dallas, Houston, Omotesando in Tokyo and Bond Street in London, amounting to nearly 89 million pounds of investment.
Executives have also reduced the number of department stores where the brand is sold to focus on higher-end retailers, working with them to manage inventory to avoid a rush of discounts that could cheapen its image.
The label has filled its stores with new styles across a wider price range, including a renewed emphasis on its staple outerwear.
It has already also seen a "nice shift" to accessories, both shoes and bags, said Akeroyd.
BRITISH ROOTS
Lee's styles and a focus on the label's British roots mark a departure from previous turnaround efforts led by designer Riccardo Tisci, who exited in 2022 after less than five years.
Lee is credited with drawing younger shoppers to Kering-owned Italian label Bottega Veneta with fashion hits like soft, clutch handbags and quilted leather mules. At Burberry he has applied colourful dandelion prints to garments and rolled out advertising campaigns with fuzzy ducklings.