Burberry seeks investor support for CEO’s turnaround plan
LONDON, May 16 — Burberry Group Plc chief executive officer Marco Gobbetti is seeking to enlist investor support for his turnaround plan with a £150 million (RM801 million) share buyback.
The trench-coat maker today reported full-year sales that trailed luxury rivals benefiting from a boom in Chinese spending. The London-based company is looking to join its peers by seeking a more exclusive image under new creative director Riccardo Tisci, who is set to show his first collection in September.
The shares rose as much as 2.3 per cent after Burberry said it saw signs that the new strategy was paying off. A US$2,000 (RM7,920) “Belt” handbag introduced last month is selling well globally, the company said, boosting Gobbetti’s hopes of building the brand’s accessories business. Burberry closed 34 retail stores during the year, while opening 14 new ones in better sites.
“Our focus is on getting the right brand positioning,” Chief Financial Officer Julie Brown said on a call. “It’s about getting Burberry in the right locations next to top luxury players.”
Luxury-goods makers LVMH and Kering both grew by double-digit per centages at the start of the year, boosted by demand from China, but the rising tide hasn’t lifted all boats. After more than a year of rapid growth for the big luxury conglomerates, Burberry, along with brands like Salvatore Ferragamo and Tod’s, is still struggling to catch the wave.
Burberry’s sales rose 3 per cent in the year ended March 31, the company said today. The company said performance was in line with guidance for the current fiscal year, and it said it was on track to deliver cost savings of 100 million pounds.
The shares have rallied 15 per cent since Tisci’s appointment in late February, despite dropping 6 per cent last week when it was disclosed that Belgian billionaire Albert Frere dumped his stake.
As the longtime designer of LVMH’s Givenchy, Tisci pioneered mixing high-end fashion with athletic-wear while also creating intricate red-carpet gowns favored by Beyonce and Kim Kardashian.
CEO Gobbetti moves to boost the brand’s high-end accessories business includes the move this week to acquire a leather-goods supplier in Italy for an undisclosed sum. The factory will create prototypes and coordinate accessory production with external suppliers, Burberry said.
“The bull case is that this Italian duo will succeed in bringing the mojo back to Burberry with a greater presence in higher-margin leather goods and higher retail efficiency,” RBC analyst Rogerio Fujimori said. — Bloomberg
Source: The Malay Mail Online