Burberry is mad for plaid. The 156-year-old company has long been associated with its gabardine-checked fabric, invented by founder Thomas Burberry. Burberry-lined "trench" coats, worn by British soldiers in WWI, became a company icon. Burberry operates retail and wholesale businesses and a licensing network. (The luxury brand's retail sales far outweigh its wholesale revenues.) Some 235 mainline stores and outlets, and 200-plus concessions in upscale department stores worldwide sell men's, women's, and children's apparel and accessories; it boasts the Prorsum and Burberry London brand names. Burberry has experienced a fashion renaissance and has expanded into baby clothes, blue jeans, and personal products.
Burberry is on a global roll after a rough patch during the global financial crisis, which dampened demand for luxury goods. In fiscal 2012 (ends March) the company's total sales grew by nearly 24%, with retail sales surging 32% vs. the prior year. Wholesale sales increased by about 8% over the same period, while operating profit jumped 25%. The strong performance followed a robust fiscal 2011 when total sales and retail sales surged 27% and 35%, respectively. Burberry chief executive Angela Ahrendts is making good progress toward achieving her goal of making Burberry a more retail driven company, with retail sales accounting for 68% of total revenues in 2012 (up from 43% seven years ago). Burberry favors retail over wholesale because the retail channel maximizes the brand's ability to manage consumer perception.
Helping drive Burberry's sales is the company's increased focus on non-apparel categories, mainly large leather goods, such as handbags. Indeed, in the past few years this category topped womenswear in its contribution to total revenue. Also, the quintessentially British brand is growing its market share worldwide: in developed markets, such as the US, and high-growth economies, including Asia and the Middle East. Indeed, the Asia-Pacific region with its apparently insatiable hunger for luxury goods accounted for 37% of Burberry's 2012 sales, overtaking Europe (32%) for the first time. The acquisition of its store network in China in 2010 has helped to boost sales in the region. In fiscal 2012 Burberry added about two dozen mainline stores, including its first large format stores in Taipei, Paris, Sydney, and Hong Kong.
Global trouble spots for Burberry in recent years include Japan and Spain, both of which have stubbornly bad economies. Spain was especially troublesome because it played host to more of the retailer's company-owned stores than the rest of Europe combined. However, in 2010 Burberry shut down its local operation there (in favor of integrating the market with global Burberry) and took a loss on the operation. Prolonged weak department store sales in Japan led Burberry to amend an apparel licensing agreement with its Japanese partner in late 2009. (The amendment cut five years off the term of the agreement and called for higher royalty payments to Burberry.) – less