Burberry needs some raw executive talent
Burberry, the iconic luxury fashion brand, unveiled a three-year turnaround plan yesterday, promising “to drive revenue growth, improve productivity and deliver at least £100m of cost savings.”
With the company’s value down by more than 20 per cent over the last couple of months, the stock should have been ripe for a bounce – but investors, yet again, were left unimpressed, sending shares down 2.7 per cent, closing at 1,112p. For context, Burberry’s share price peaked at 1,921p in January last year.
Times have been tough, granted, and the company cannot be blamed for broad macro-economic slowdowns or the fast-changing habits of brand-hungry Chinese consumers. Management was keen to stress that sales – which dipped for the first time in recent history – were up three per cent if you exclude Hong Kong and Macau.
It almost goes without saying, however, that one can’t simply ignore HK and Macau – and that top executives are paid the big bucks precisely to deal with these kind of unpredictable trends. In past years Burberry expertly positioned itself to take advantage of China’s astonishing economic rise, and as such it must now prove itself adept at coping with the Asian powerhouse’s distinct traits. As one analyst said yesterday, Burberry “put all its trenchcoats in one basket”, and is now being hit by the consequences.
Read more: Burberry unveils its turnaround plan
The turnaround plan consists of a string of initiatives: a smaller range of products, a sharper focus on bags, greater emphasis on direct-to-customer sales through its website and a new app, and a good old fashioned commitment to improve customer service. The statement also expanded on the previously-announced policy of allowing customers to buy clothes straight from the catwalk.
These are all neat ideas, but they do not smack of the big, bold decisions that the best bosses rely on to manoeuvre their large corporate vessels into calm waters. Burberry has admitted that it needs to bring in some fresh executive talent to complement the skills of Christopher Bailey and Carol Fairweather, both of whom appear content to welcome a new colleague to the top table. The City awaits an appointment – and it needs to come soon.