My OperaBurberry Goes Back to Basics
Wednesday, May 20, 2009 9:44:14 PM
Burberry PLC swung to a loss for its full fiscal year as the British luxury brand felt the sting of an expensive restructuring and heavy discounting. But sales rose 21% as the company tried to shelter itself against the recession with a lot more of the plaid pattern that made its raincoats an icon.
Model Agyness Deyn wears Burberry to a fashion event in Manhattan earlier this month. The label's name will appear at the top of Burberry's new U.S. home on Madison Avenue when the office opens next week. Burberry's new U.S. headquarters at 444 Madison Ave., set to open next week. The logo is one of a few to be permanently emblazoned across the U.S. skyline. Burberry posted a net loss of £6 million ($9.2 million) for the year through March 31, compared with a net profit of £135.2 million a year earlier.
The loss stemmed in part from the cost of writing down the value of stores in Spain, as well as from a £55 million charge for a big cost-cutting program that included the layoff of 15% of its work force. Sales increased to £1.2 billion pounds. Like other luxury labels whose merchandise and marketing has turned more sober than it was during the boom years, London-based Burberry is courting customers with products that show off the basic brand and stay in fashion longer than some of the more transient styles of the past.
Burberry Chief Executive Angela Ahrendts said that the company believes the effects of the recession are beginning to abate. The company's signature plaid plays heavily in its London showroom. The pattern is being redeployed in subtle as well as obvious ways, such as a suede bag where the plaid is visible only through a mesh exterior. "It's very intentional," Ms. Ahrendts said in an interview. After Burberry's comeback in the 1990s, when the plaid was splashed on anything from dresses to dog bowls, Burberry backed away from the pattern to counter overexposure. "Now we're coming back with a renewed strategic use of the branding platform," Ms. Ahrendts said.
Many of the world's fashion houses are responding to today's consumer caution with more traditional styles. Current advertising motifs by Moët Hennessy Louis Vuitton LVMH SA, the world's largest luxury-goods company by sales, show actor Sean Connery with a classic Louis Vuitton travel bag. Handbag ads featuring pop star Madonna are shot in an old-fashioned French café, far removed from the glitzy backgrounds of past campaigns.
Burberry calls itself a more "democratic" brand than other luxury labels because it offers a wide range of prices and caters to different age groups. The company says consumers' conservative new tastes fit its classic brand image. "In this market, people want the reassurance of a familiar brand," said Christopher Bailey, Burberry's creative director.
Write to Cecilie Rohwedder at cecilie.rohwedder@wsj.com Printed in The Wall Street Journal, page B
Model Agyness Deyn wears Burberry to a fashion event in Manhattan earlier this month. The label's name will appear at the top of Burberry's new U.S. home on Madison Avenue when the office opens next week. Burberry's new U.S. headquarters at 444 Madison Ave., set to open next week. The logo is one of a few to be permanently emblazoned across the U.S. skyline. Burberry posted a net loss of £6 million ($9.2 million) for the year through March 31, compared with a net profit of £135.2 million a year earlier.
The loss stemmed in part from the cost of writing down the value of stores in Spain, as well as from a £55 million charge for a big cost-cutting program that included the layoff of 15% of its work force. Sales increased to £1.2 billion pounds. Like other luxury labels whose merchandise and marketing has turned more sober than it was during the boom years, London-based Burberry is courting customers with products that show off the basic brand and stay in fashion longer than some of the more transient styles of the past.
Burberry Chief Executive Angela Ahrendts said that the company believes the effects of the recession are beginning to abate. The company's signature plaid plays heavily in its London showroom. The pattern is being redeployed in subtle as well as obvious ways, such as a suede bag where the plaid is visible only through a mesh exterior. "It's very intentional," Ms. Ahrendts said in an interview. After Burberry's comeback in the 1990s, when the plaid was splashed on anything from dresses to dog bowls, Burberry backed away from the pattern to counter overexposure. "Now we're coming back with a renewed strategic use of the branding platform," Ms. Ahrendts said.
Many of the world's fashion houses are responding to today's consumer caution with more traditional styles. Current advertising motifs by Moët Hennessy Louis Vuitton LVMH SA, the world's largest luxury-goods company by sales, show actor Sean Connery with a classic Louis Vuitton travel bag. Handbag ads featuring pop star Madonna are shot in an old-fashioned French café, far removed from the glitzy backgrounds of past campaigns.
Burberry calls itself a more "democratic" brand than other luxury labels because it offers a wide range of prices and caters to different age groups. The company says consumers' conservative new tastes fit its classic brand image. "In this market, people want the reassurance of a familiar brand," said Christopher Bailey, Burberry's creative director.
Write to Cecilie Rohwedder at cecilie.rohwedder@wsj.com Printed in The Wall Street Journal, page B
