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Dazzling: singer Shakira wears a Burberry dress
Burberry is facing criticism from angry investors over its lackluster fashion ranges and a plummeting share price that some fear could leave it vulnerable to a takeover.
Bosses at the British luxury fashion brand are likely to face an awkward annual general meeting (AGM) on Tuesday amid growing shareholder unrest.
Burberry shares fell from a high of 2,609 pence in April 2023 to 886.6 pence yesterday, a drop of 66 per cent.
One disgruntled investor said: “The revolving door of CEOs, designers and CFOs needs to end, with a complete overhaul of the management team and non-executive board.”
‘Burberry’s management has caused its share price to plummet, with more than 4% of shares held in short positions (when traders bet that the share price will fall).
“This is compounded by a significant decline in sales, profits and cash flow. The only indicator that is increasing is debt.”
Even the outfits worn by saleswomen in Burberry’s luxury stores seem to reflect the luxury brand’s current plight.
“The uniforms are more Primark-esque than luxury brands. To me, that’s a symbol of Burberry’s failed fashion strategy,” the investor said.
The mood has been further dampened by rumours that the low valuation of the company founded in 1856 could prompt a takeover bid from a bidder keen to acquire a piece of British heritage at a bargain price.
French luxury giant LVMH is seen as a potential predator and its chief executive Bernard Arnault is renowned for his ability to revive dull luxury brands, including Tiffany and Berluti.
Private equity groups could also be on the lookout.
Luca Solca, an analyst at Bernstein, said Burberry had always been considered too expensive by buyout firms, but “it’s harder to rule that out today given the direction the market capitalisation has taken.”
Burberry is credited with inventing the trench coat for soldiers during World War I and current versions of this “traditional raincoat” are selling well.
But the new collection of bags and clothing from creative director Daniel Lee, appointed in 2022, appears to lack the must-have style for those with deep pockets, a group Burberry is targeting with its “high” prices. At the same time, aspirational shoppers, always a key clientele, may be put off by such prices.
Burberry is not alone in its troubles, amid slowing spending in China, which accounts for 35 percent of global luxury goods sales, according to management consultancy Bain.
Sales and profits have also been weak at Gucci, a division of the Kering conglomerate.
But investors say Burberry Chief Executive Jonathan Akeroyd and his fellow directors are using the slowdown as a smokescreen. In May, the company said pre-tax profits for the year to March fell to £383m from £634m a year earlier.
Akeroyd spoke of “refocusing” the brand, with an emphasis on its Britishness, although the results of this are unlikely to emerge until the second half of 2025. Burberry declined to comment yesterday.
ANNE ASHWORTH: Visiting their flagship store in the UK made me feel sad
Burberry’s UK flagship store in Knightsbridge is sleek and bright, filled with design details that evoke the company’s traditions.
Its interior is also more exciting than most of the uninspiring merchandise found on the rails or shelves.
Burberry at its best combines elegance, avant-garde and tradition.
Brilliant: the Burberry store on Sloane Street, London
During a visit to the store yesterday, I understood why the company’s investors are concerned that accessories and clothing lack these qualities and are demanding an immediate makeover.
You shouldn’t like the look of the ladder more than the look of the bags, but that’s how I felt and it made me sad.
Salespeople are key ambassadors for any brand and the staff at this store are friendly and welcoming. But their uniforms, in Burberry’s signature blue and khaki, are sinister and low-quality.
This great British brand is part of our fashion heritage and the investment funds in which many of us save own its shares.
This means that we all have a stake in their future.
The Burberry logo is “Prorsum,” which is Latin for “forward.”
But investors say he should stop and change his strategy. And they are right.
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