Let us talk about fashion this week. Certainly many girls have some interest in fashion, buy Vogue or Marie Claire week by week or browse thought Selfridges, well I am no different. My sister and I have this unwritten rule of spending Sunday morning walking up and down Selfridges browsing from floor to floor even though rarely we buy anything. I think it is her escape from Canary Warf and my hour away from Regent's Park, well Regents' College precisely. Moving on, the story that caught my attention this week is the increase in Burberry sales.
I read the story in Telegraph.co.uk, Guardian.co.uk and Reuters.
The story is that 150-years-old British brand experienced increased revenues in Q2. They reported revenues of £343m, on the contrary to the analysts’ forecast of £320m-£335m. This upwards movement in revenues was mainly caused by increase in demand for Burberry handbags, leather good and their well know print scarves. Retail sales were mainly increasing in Europe and Asia whereas in markets like US and Spain Burberry experienced declines. Overall retail revenue was up 16% (£163m). Growth was the strongest in Britain and North Korea which might be because tourists are attracted by weaker currencies. I have to say maybe a month ago I went to Bicester Village which is a shopping outlet an hour way from London where Burberry has its shop as well. Literally the queue was going around the shop and people were just coming out with hands full of Burberry bags. Due to this positive outlook, Burberry is planning to open 15 new stores worldwide even though they currently have “122 outlet stores, 255 concessions, 90 franchise stores and an e-commerce business in over 25 countries”. In my opinion this is a bit rushed decision. Luxury goods firms were fit by recession very hard. People faced decreases in their salaries, job redundancies, and smaller disposable income consequently stopped buying luxury products. Even people who maintained their wealth or increased it during the recession stopped buying as well because of uncertainty what might happen tomorrow. Burberry did experience decrease in wholesale revenues by 21% but that was caused by 23% of customers cutting back on their orders to reduce unwanted stock.
Telegraph and Reuters have very similar headlines both suggesting that Burberry handbags are driving this increase in revenues whereas Guardian headline is more neutral saying “Burberry enjoys a sales rise”. Having read all three articles, I must say that Guardian ‘won me over’ again. The article focused mostly on the reasons for this rise in Burberry sales, used a lot of figures to support the story throughout keeping my attention all the way to the end. The language used is very clear, no need to have any financial / economic background in order to understand. The story is not ‘big sexy news’, but is still interesting to see how recession is affecting this market segment and how this luxury good brand is dealing with it. As I wrote in my previous blog, a lot of newspapers today are writing about our economies ‘healing’ from the recession and suggesting that financial crises might be over by the begging of 2010. I personally disagree; all these small improvements are still ‘too small’ to say that this ‘big economic downturn’ is over.
Telegraph story is very short, but gets strength to the point. Concentrates more on the share prices of Burberry; something that was not covered to great extend in Guardian. Again I must say Reuters is the one I liked the least. It might be just the stile and structure that does not appeal to me. They use a lot of figures and I think is it easy for the reader to get confused with all that numerical data. However the audience for Reuters might be financial analysts or investors in which case the structure and content of the article makes sense. One thing I noticed is that all three articles mentioned how hard luxury goods sector was fit by recession and that this slight improvement in Burberry performance might be a signal that ‘hard time’ is over and that ‘better time’ is about to come for luxury goods/services companies. Guardian decided to mention which celebrities were present at Burberry’s fashion show three weeks ago here in London; names like Victoria Beckham, Twiggy, Gwyneth Paltrow and Samantha Cameron. Does this really matter in the story? It certainly made me think. Can it be that company asked them to write this story and mention these names?
To sum up, I must say well done Burberry. All three articles covered the story very well, each concentrating on different things like, reason for increase in sales, share prices, competition performance etc. From the latest news we can also see that Burberry’s rivals such as Richemont, Swatch and LVMH are experiencing increase in their performance. It seems like confidence is coming back. Furthermore I believe that there will always be demand for luxury goods to some extent, more or less depending on where we find ourselves in economic cycle. However ‘Passion for fashion’ will always be there.
Sources:
Telegraph.co.uk “Burberry handbags drive rise in revenue” http://www.telegraph.co.uk/finance/newsbysector/epic/brby/6323776/Burberry-handbags-drive-rise-in-revenues.html
Guardian.co.uk “Burberry enjoys sales rise” http://www.guardian.co.uk/business/2009/oct/14/burberrygroup-londonfashionweek
Reuters “Handbags and snoods help Burberry top forecasts” http://www.reuters.com/article/rbsApparelAccessories/idUSLE11480720091014?pageNumber=2&virtualBrandChannel=11604&sp=true
AS
No comments:
Post a Comment