Questions remain as Burberry awaits half-year results

The British luxury group Burberry is to publish its first half-year results on November 14. The company, famous for its trench coats and checkered lining, is grappling with falling sales and its fourth CEO in a decade as Joshua Shulman takes the reins.

It's a historic brand – textile apprentice Thomas Burberry opened his first shop in 1856 at just 21 years old. In the following years, his invention of water-resistant gabardine revolutionized outerwear and gave the world the trench coat – so named as it was worn by soldiers in the trenches of World War I.

Since that time the company has gone on to become a worldwide luxury brand, trading on its sense of Britishness. But its image has also fallen victim to its own popularity.    

"When you think about luxury, generally the consistent opportunity is exclusivity," consumer expert Kate Hardcastle told CGTN Europe. 

"What we've seen in the Burberry brand, particularly in the noughties and nineties and certainly more recently as well, is when it dips into areas where it becomes almost of mass appeal, whilst it may impact sales very instantaneously, it then has a challenge for the legacy of the brand." 

Falling sales

In July, Burberry reported a 22 percent year-on-year slide in Q1 sales.  That prompted the company's second profit warning this year, a suspension of the dividend and an announcement of UK job cuts.  

Meanwhile the share price has fallen around 50 percent across the year, prompting its exit from the FTSE 100 index in September and speculation that this quintessential British brand could be ripe for a takeover.

Perhaps in a bid to recapture the previous Cool Britannia heyday of the 1990s, Burberry has recruited well known British celebrities, along with Chinese actor Zhang Jingyi, as ambassadors.

Sales are down across the world, including in China, where analysts say competition is fierce.   

"This used to be a territory where brands could just almost rest on their laurels," said Hardcastle. "When I was trading there 20 years ago, we could bring British Heritage in, put a Union Jack on it and therefore, hey presto, we were delivering on our promise. 

"But this is much more of a transient, opportunistic, social media-focused market, where absolutely it's got to be relevant to young people and Burberry loyalists in China, who aspire to the brand and where their visions are."

Out with the outlet stores?

Some analysts have suggested Burberry should close its numerous outlet stores, which, while profitable, serve as a disincentive for customers to pay full price. 

Tamara Cincik, founder and CEO of ethical thinktank Fashion Roundtable, is also professor of fashion and sustainability at Bath Spa University. She told CGTN Europe the company needs to urgently review and streamline its production process.  

"I think you'd need to look at how much surplus you're creating within your supply chain because clearly that's a problem if you've got that many outlet stores," she said.

Meanwhile, with Burberry underperforming its peers in the luxury sector, pressure is on the new leadership to revive its fortunes quickly, as it seeks to regain its place as a global fashion powerhouse.