Burberry Closing Stores in the U.S. as It Turns Focus to the Ultra-Rich in Asia
Shares of the British luxury apparel brand Burberry Group plc (LON:BRBY) took a plunge last week after the company announced a major strategic overhaul. In a bid to “sharpen” its image, Burberry is closing stores in a number of markets including the U.S.
Despite posting growth in sales and earnings, Burberry shares nosedived as the market turned skeptical on the CEO’s renewed strategy.
The Italian chief, Marco Gobbetti, who took over the British company just earlier this year, has announced plans to close a number of Burberry stores in markets considered “unluxurious” and turn its focus towards the ultra high-end markets dominated by luxury shoppers. Here’s what Burberry CEO Marco Gobbetti had to say:
“To ensure our distribution is consistent with our brand positioning, we will rationalise non-luxury wholesale and retail doors, with an initial emphasis on the US and then EMEIA (Europe, Middle East, India and Africa).”
Burberry is keeping mum on the exact number and locations of the stores being closed. However, it is certain that the overhaul will begin from the American market where the so-called “retail apocalypse” is coming to a head.
Burberry Closing Stores in the U.S. as American Retail Suffers
The announcement comes just days after the company’s now-former Chief Creative Officer Christopher Bailey, who served the company for 17 years, revealed plans to exit the company. Meanwhile, the company has also been cutting costs to improve its bottom line.
The major strategic change follows the luxury brand losing ground to archrivals Gucci, Louis Vuitton, Chanel, and the like.
Burberry’s iconic check print has long been the prime target of counterfeits. Its classic checkered scarves, bags, and trench coats have ostensibly been the most replicated luxury designs ubiquitously available around the world. This is why luxury buyers looking for exclusivity have been steering away from the brand.
CEO Gobbetti wants to change that now. He is shifting his focus away from North America and Europe and towards the Asia-Pacific markets, where he sees growth.
As part of the plan, the company is also pulling its merchandise from cheaper wholesale and retail channels where its luxury brand status has been getting hurt. This includes pulling away from famous U.S. department stores, which have themselves been facing a decline in the midst of dipping retail sales.
In fact, this year has historically been the worst year on record for retailers in the country, resulting in thousands of job losses. Burberry’s store closures will only add to the growing retail job losses in America, which are set to cross the Great Recession levels.
“Burberry half-year profits surge as it announces store closure scheme,” Retail Gazette, November 9, 2017.
“Now Burberry plans to go even more upmarket: New Italian boss declares £400 handbag is too cheap,” This is Money, November 9, 2017.