This Is the Real Reason Burberry is Closing 38 Stores
Like many retailers, Burberry is overhauling its store strategy as part of an aggressive plan to get back on track.
During a presentation to analysts on Thursday to discuss the company’s results for fiscal 2019, CEO Marco Gobbetti said the company plans to shutter some 38 stores by the end of the year. The units, Gobbetti explained, are on the smaller side of the retail network and are deemed non-strategic for the brand’s long term vision. This is to ensure that the brand is focusing their resources on the most impactful locations.
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Despite relatively flat numbers and a declining share price, Gobbetti remained optimistic about the brand’s turnaround efforts.
According to Gobbetti, the company is making strides on store refurbishments plans to revamp around 80 of its existing locations to reflect new creative director Riccardo Tisci’s aesthetic. “The customer experience is incredible when Riccardo’s product is in the refreshed stores,” explained COO and CFO Julie Brown to analysts.
In addition, 30 pop-ups are slated to open worldwide in the coming months.
While Tisci’s first styles for the collection launched in stores in February, his real impact will show in the months to come.
That collection was shown on the runway in September last year, so the full effect of Tisci’s impact is not fully realized in the latest earnings report.
Since the fiscal year ended on March 31, only about 10 to 15 percent of his debut collection had an effect on 2019 results. (Sales remained flat at 2.7 billion pounds, and operating profit took a 6% dive to 438 million pounds.) By the end of March 2020, about 75 percent of Tisci’s designs are expected to be available in the company’s shop floors as the company phases out older products from past collections.
Since taking over CEO duties for Burberry in 2017 (he arrived from LVMH-owned Celine), Gobbetti has expressed his desire to turn Burberry more upmarket in order to compete with the likes of Dior, Chanel and Louis Vuitton. The transformation plan is expected to be complete in 5 years.
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