With items often costing thousands of dollars, the average consumer might already considered Burberry, a luxury brand. But the UK fashion giant is changing it's strategy, to move even further up market. To ensure it's sitting firmly in luxury, there's a $15 million game plan. That involves focusing on leather goods, updating it's fashion range more regularly and closing some retail and wholesale stores in areas considered insufficiently swanky.
It's a move to enhance profit margins that have proved elusive under outgoing designer, Christopher Bailey. But the long awaited strategy update failed to convince investors. Shares falling more than 10% after the announcement on Thursday, that despite Burberry's better than expected first half resorts, which saw revenue sales and adjusted operating profit rise.
A lot is being credited to Bailey who is the company's top designer for 17 years. He announced his departure last week, and there's a tough act to follow for new Chief Executive Marco Gobbetti. But Gobbetti enters the luxury, luxury market at a good time. Thanks to thriving demand from Chinese customers.
Worldwide sales are expected to grow 6% this year.