20 November 2023
Burberry cannot increase prices if it does not increase the quality of its products. The British brand is elevating its positioning. And it took a step forward with the arrival of the new creative director Daniel Lee. Now the objective is to bring the average price of the bags to the level of the competitors and, in the meantime, the results are visible. Comparable sales at leather goods stores rose 8% year over year in the first half of the fiscal year ( +3% in the second quarter). Due to the slowdown in luxury, Burberry issued a profit warning which depressed the market on November 16th. Report by La Conceria.
The company numbers
The numbers obtained by leather goods from April to September essentially satisfied Burberry CEO, Jonathan Akeroyd . Which saw good results from both the iconic vintage check models and the new ones such as the Night bag and the Trench bag, designed by Lee. New bags that are priced higher than previous styles. And they contribute to raising the level of the average price of the brand’s offering. Which is trying to climb a few steps in its positioning.
The quality of the products
“It’s not just about rising prices. We have really improved in terms of product and leather quality,” Akeroyd confessed to Vogue Business. In essence, the CEO of Burberry would have said that new bags cost more because they are qualitatively better than the previous ones, even in terms of materials. To close the circle on the positioning of the brand, the new CFO Kate Ferry observed that to support Lee’s projects, in the first half of the year, the English company spent 10% more than in previous seasons.
The long-term goal
Burberry’s long-term goal of reaching £ 5 billion in turnover still stands. But the context has become more challenging. “We have very strong potential. We remain very confident,” Akeroyd said. This despite the English company having declared that in the first half (ended September 30), revenues grew by 4% at current exchange rates and 7% at constant exchange rates to 1.4 billion pounds. Burberry has warned that it may miss its revenue growth target for the full 2024 fiscal year. And operating profit could also be near the bottom of the consensus range.