Burberry is to cut sales to non-luxury stores, simplify its ranges and leverage its digital reach as part of a new strategy under CEO Marco Gobbetti.
As it revealed its bounce back to double digit growth in the six months to 30 September, the brand set put its goals for the coming years as it “sharpens its brand positioning” and establishes itself “firmly in luxury”.
Under the microscope are stores, product, communication and finance.
Burberry will scale back sales to “non-luxury” wholesale and retail doors, initially focusing on the US before turning to Europe, the Middle East and Africa.
Other stores will be refurbished to “transform” Burberry’s in-store experience and sharpen its luxury focus.
Burberry promises product will be at the heart of its ongoing transformation. As well as building on the strength of its existing clothing and “re-energising” its offer, it will continue to simplify its ranges.
It will also create new luxury leather goods and accessories to attract new high-end customers.
This is another part of the strategy that vows to put product at its centre. Burberry will leverage its digital reach, be “bold” in the way it engages luxury consumers, and revamp its editorial content and experiences.
Ambitions include delivering high-single digit revenue growth along with “meaningful” operating margin expansion.
Burberry expects to remain strongly cash generative, is dedicated to its “progressive” dividend policy and expects to continue to provide additional shareholder distributions in line with its capital allocation framework.
Gobbetti said of the strategy: “Now is the right time for Burberry to implement the next phase of its transformation. By re-energising our product and customer experience to establish our position firmly in luxury, we will play in the most rewarding, enduring segment of the market.
“We have the foundations to build on and the team to execute our plans. This will enable us to drive sustainable growth and higher margins over time, whilst continuing to deliver attractive returns to shareholders.”
Last week it was announced that Christopher Bailey is set to leave his role of president and chief creative officer at the end of 2018, after Gobbetti took over as CEO in July.
Burberry has stuck with its initial plan to “simplify its offer” as outlined by Christopher Bailey last year. Continuing to shine its spotlight on digital outreach, focus on core product and prioritise the more “luxury” side of luxury, the brand’s uptick in growth implies it is paying off.
The “entry level” millennial consumer Bailey promised to lure in, however, has been left out in the cold as Burberry plans to cut sales to less luxurious wholesalers and invest in high-end customers instead. Whether that customer will ferry Burberry to its target of £100m cost savings over the next two years is another matter.