How British fashion icon Burberry lost its way

burberry lost its way

In a desperate attempt to steal London Fashion Week last September, Burberry’s marketing team went into overdrive, planning a “takeover” of various London establishments.

For a few days, Bond Street Tube station became “Burberry Street”, the capital’s black cabs were wrapped in Burberry’s new English rose motif, and a popular greasy spoon coffee in north London was adorned with the now central blue branding. for his later designs.

The stunt backfired.

When new creative director Daniel Lee thought it was a clever way to channel the brand’s distinctly British roots, many Londoners were outraged by what was seen as one of the most significant examples of “corporate erosion “.

Others saw something that could have been worse: further evidence of a company that was on the cutting edge and lost its way.

Many Londoners viewed Burberry's 'takeover' in London as a prime example of 'corporate creep'Many Londoners viewed Burberry's 'takeover' in London as a prime example of 'corporate creep'

Many Londoners viewed Burberry’s ‘takeover’ in London as a prime example of ‘corporate creep’

Burberry’s struggles have existed for decades before the current regime – a double act featuring chief executive Jonathan Akeroyd and artistic genius Lee. But instead of overseeing a promised return to catwalk dominance, Burberry has gone further out of fashion.

Profits have plunged, debt is mounting and its share price has crashed – leaving rivals, former City executives and experts wondering where it all went wrong.

With Burberry shares languishing at £10.32 – the cheapest they have been for 12 years – there is new speculation that a company described as “sui generis in the context of the UK stock market” said star stock picker Nick Train is once again a takeover target for foreign predators and private equity.

There is little doubt who is on the board for the malaise. After revealing a 40pc fall in annual profits last month, Akeroyd waived his £2.3m annual bonus, on top of his £1.1m annual salary.

Danuta Gray, chairman of Burberry’s remuneration committee, said it would not be “appropriate” for Akeroyd to receive a bonus. In an era where rewards for failure have become all too common in boardrooms, it was a rare public snub.

Burberry boss Jonathan Akeroyd waived his £2.3m annual bonus after revealing a 40pc fall in annual profitsBurberry boss Jonathan Akeroyd waived his £2.3m annual bonus after revealing a 40pc fall in annual profits

Burberry boss Jonathan Akeroyd waived his £2.3m annual bonus after profits fell 40pc – Dave Bennett/Getty Images for Burberry

A bonus for chief financial officer Kate Ferry for her “great wider contribution” will do little to ease Akeroyd’s disappointment.

The question now is whether the writing is on the wall for a man who swapped Versace for Burberry in 2022, getting an eye-watering package in the process.

As part of his move from Milan to London, Akeroyd was given an immediate transfer payment of £6m, with the potential to earn £11m if certain performance measures were met.

However, any changing of the guard at Burberry will be a decision for City grandee and chairman Gerry Murphy, whose retail reputation has seen him split his time between Burberry and Tesco – where he was appointed chairman last year.

Was last week’s departure of chief marketing officer Rob Hanley the catalyst for more high-profile exits in the coming months?

The company was recently forced to deny it was taking on Akeroyd’s replacement after reports in the fashion blog Miss Tweed that Murphy had begun secretly interviewing candidates.

Burberry responded with a firm denial: “We do not comment on baseless speculation but to be clear Jonathan has the full support of the Burberry Board.”

Some question whether part of the problem lies with a large but light board. “I don’t know anyone on him,” said one former non-executive.

Is a serious person willing to ask some tough questions?

Or is the bigger problem a lack of fashion nous at board level? Out of 10 non-executives, only two worked in luxury goods.

Murphy’s retail experience is more DIY than DKNY. He spent almost five years running, owner of B&Q Kingfisher, leaving in 2007 with his shares trading around where they were when he arrived. Meanwhile, a company whose heritage may be its most unique selling point has just two Brits – one of them an accountant.

Other management changes probably reflect badly on Murphy. Burberry is a company that has long been a drama, and the situation has not changed since it was taken over by Sir John Peace in 2018.

The departure of Akeroyd’s predecessor, luxury goods veteran Marco Gobbetti, in 2021 left the board seemingly without a successor.

A year later, chief designer Riccardo Tisci stepped down at the same time as finance manager Julie Brown left for drug giant GSK.

On the other hand, there are serious doubts about the direction Burberry is heading under Akeroyd. After last month’s profit bomb, analysts weighed in on the company’s strategy.

Bernstein analyst Luca Solca said it was clear that Burberry was “underperforming its peers and the market”, adding: “Whatever the reason, the brand relaunch plan is not working at the moment.”

Analysts at Citibank said: “The jury is still out on whether Daniel Lee’s brand aesthetic could lead to stronger commercial success and double-digit growth.”

Burberry bigwigs accused of prioritizing hype over 'brand DNA'Burberry bigwigs accused of prioritizing hype over 'brand DNA'

Burberry bigwigs have been accused of prioritizing hype over ‘brand DNA’ – HENRY NICHOLLS/AFP via Getty Images

Urging clients to sell the shares, UBS asked if the muted reaction to the brand overhaul meant “the turnaround may have to be more expensive to succeed”. Burberry may have to “tighten its spending and gross margin reinvestments”, he said.

“Our discussions with selected wholesalers indicate that its price point is too high, which is driving a year-over-year decrease in orders, although some of the social media trends do not indicate any ‘hype’ among consumers ,” the bank said.

Fabio Becheri, a former director at Gucci, insists that his problems predate Akeroyd but are exacerbated by his decision to try to increase sales of handbags and other accessories.

He said: “Burberry has made critical mistakes: Gobbetti appointed Tisci to bring instant hype but without paying attention to the DNA of the brand, and Daniel Lee is operating in the context of progress with an accessory strategy – the wrong mission it. “

Akeroyd has admitted the company is falling short of expectations while criticizing the Government’s so-called tourism tax for hitting spending among overseas visitors. Management has also noted a broader slowdown in luxury spending, particularly among Chinese shoppers.

Questions have been raised repeatedly about whether Burberry is overexposed to China, where it generates 30pc of its sales. Can that continue with rising tensions between Beijing and the West? Will Chinese shoppers still want to wear Burberry’s iconic checks the same way they once did?

Train admitted that the fall in Burberry’s share price is “going down” and claims that concerns about weakening Chinese demand are “justified” but suggests that it has “every chance of taking part in the first promotion other”.

Until that happens, Akeroyd’s ambition to reach £5bn in revenue looks like a fantasy, especially as its latest annual turnover fell just shy of £3bn.

Her struggle is a stark contrast to the days when Burberry graced the runways with a spritely Kate Moss fronting its ad campaigns in the late 1990s.

Burberry's recent struggles are a stark contrast to the days when Kate Moss fronted its ad campaignsBurberry's recent struggles are a stark contrast to the days when Kate Moss fronted its ad campaigns

Burberry’s recent struggles are a stark contrast to the days when Kate Moss fronted its ad campaigns – EDDIE MULHOLLAND

After visiting her store on Bond Street, which has undergone an expensive refurbishment, this week, there was little to suggest that a return to the glory days was imminent.

On a sunny Wednesday afternoon, with only a handful of customers inside, a well-presented staff could be seen standing around looking bored. Even fewer shoppers left after buying something.

One of those who made the purchase – Jamie, a stylist based in London – approved of how designers have kept their clothes “classic,” while “making things a bit more contemporary”.

However, Sæmundur and his girlfriend Tinna, both 25 years old from Iceland, came up empty-handed and very underwhelmed: “It’s a bit expensive and not really that exciting,” says Saemundur . “I’m not a big fan, I know [Tinna] he likes the coats… there is something like my grandmother,” he says.

As Burberry tries to revive its image, it will have to convince customers that it represents the future of fashion, not the past.

Burberry declined to comment.

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