Dazzling: Singer Shakira wears a Burberry gown
Burberry is facing flak from angry investors over lacklustre fashion ranges and the vertiginous decline in its share price which some fear could make it vulnerable to a takeover.
Bosses at the British luxury fashion brand are likely to face an uncomfortable annual general meeting (AGM) on Tuesday amid gathering disquiet from shareholders.
Burberry’s shares have fallen from a high of 2,609p in April 2023 to 886.6p yesterday, a decline of 66 per cent.
One unhappy investor said: ‘The revolving door of CEOs, designers and chief financial officers has to end, with a complete overhaul of the management team and non-executive board.’
‘Burberry’s management has achieved a collapsing share price with over 4 per cent of shares being shorted [when traders bet on a share price fall].
‘This is coupled with sales, profits and cash flow all in major decline. The only metric going up is debt.’
Even the sales assistants’ outfits in Burberry’s lavish stores are felt to reflect the upmarket brand’s current dismal predicament.
‘The uniforms are more Primark than premium label. For me, that’s emblematic of Burberry’s failed fashion strategy,’ the investor said.
The mood has been further soured by talk that the low valuation of the company founded in 1856 could bring a takeover approach from a bidder keen to pick up a piece of British heritage at a bargain price.
French luxury giant LVMH is viewed as a potential predator and its chief executive, Bernard Arnault, is famously skilled at the turnaround of upmarket brands that have lost their lustre –among them Tiffany and Berluti.
Private equity groups could also be on the prowl.
Luca Solca, analyst at broker Bernstein, said that Burberry has always been considered too expensive by buyout firms but ‘it’s harder to dismiss that possibility today, given where the market cap has gone’.
Burberry is credited with the invention of the trench coat for soldiers during the First World War and the latter day versions of this ‘heritage rainwear’ are selling well.
But the new collection of bags and clothing from creative director Daniel Lee, appointed in 2022, seems to lack the must-have vibe for the seriously moneyed, a group that Burberry is targeting with ‘elevated’ pricing. At the same time, aspirational shoppers, always a key clientele, may be put off by such pricing.
Burberry is not alone in its troubles, against the background of a spending slowdown in China which accounts for 35 per cent of global luxury goods sales, according to the management consultants Bain.
Turnover and profits have also been weak at Gucci, a division of the Kering conglomerate.
But investors contend that Burberry chief executive Jonathan Akeroyd and his fellow directors are using the slowdown as a smokescreen. In May, it said pre-tax profits for the year to March fell to £383m, against £634m in the year before.
Akeroyd spoke of ‘re-focusing’ the brand, with an emphasis on its Britishness, although the results of this would be unlikely to emerge until the second half of 2025. Burberry declined to comment yesterday.
ANNE ASHWORTH: Visiting its flagship UK store made me feel sad
The Burberry flagship UK store in Knightsbridge is slick and glittering, full of design details that evoke the company’s traditions.
Its interior is also more exciting than most of the somewhat uninspiring merchandise on the rails or displayed on the shelves.
Burberry at its best blends elegance, edge and heritage.
Glittering: Burberry’s store on Sloane Street, London
During a visit to the store yesterday, I understood why the company’s investors worry that the accessories and clothing lack these qualities – and are demanding an immediate makeover.
You shouldn’t like the look of the staircase more than the look of the bags. But that is how I felt, and it made me sad.
Sales assistants are key ambassadors for any brand and this store’s staff are friendly and welcoming. But their uniforms, in the Burberry livery of blue and khaki, are baleful and downmarket.
This great British brand is part of our fashion heritage and the investment funds in which so many of us save, own its shares.
This means that we all have a stake in its future.
Burberry’s logo is ‘Prorsum’, the Latin for ‘forwards’.
However, investors say that it should stop and change its strategy. And they have a point.
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