Business

Burberry to shut stores that are not luxurious

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Burberry says it wants to "play" in the most rewarding part of the luxury market

Burberry is to close stores and stop its products being sold in areas it feels are not luxurious enough, as part of a drive to take its brand even further upmarket.

The change of direction was announced just a week after the news that its top designer Christopher Bailey, the man credited with creating its luxury focus, was to leave the business after 17 years.

New chief executive Marco Gobbetti, who replaced Bailey in the top job earlier this year, said he wanted to focus on leather goods and fashion and cut sales to non-luxury stores, initially in the United States.

The "re-energising" programme would then be rolled out to Europe, the Middle East, India and Africa, Burberry said.

It gave no detail on how many of its stores would close or how many jobs would be lost but it said the rationalisation programme – costing £15m – would mainly affect wholesale.

The division, essentially outlets in department stores, currently makes up about 30% of the group's current sales.

Mr Gobbetti said: "Now is the right time for Burberry to implement the next phase of its transformation.

"By re-energising our product and customer experience to establish our position firmly in luxury, we will play in the most rewarding, enduring segment of the market.

"We have the foundations to build on and the team to execute our plans. This will enable us to drive sustainable growth and higher margins over time, whilst continuing to deliver attractive returns to shareholders."

The new focus was announced alongside Burberry's first-half results, which beat market expectations.

They showed a 4% rise in like-for-like sales with adjusted operating profits up 17% to £185m.

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Source – News.sky.com

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