Burberry shares plunge on concerns over new high-end luxury strategy

A woman stands in front of a Burberry shop at a shopping mall in Jakarta. Shares in the British fashion icon plunged Thursday after it said sales will stagnate for the next two years. (Reuters)
Updated 09 November 2017
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Burberry shares plunge on concerns over new high-end luxury strategy

LONDON: Shares in British fashion icon Burberry plunged as much as 14 percent Thursday after it said sales will stagnate for the next two years as the company shifts strategy to focus on the high-end luxury market following the departure of designer Christopher Bailey.
Burberry plans to pull back from department stores, starting in the US, and remodel its own shops to enhance “luxury service.” The company said it is responding to a changing market in which the luxury consumer now “demands innovation, curation and excitement.”
Investors were more focused on the cost of the strategy shift, with Burberry saying revenue will remain “broadly stable” for the next two fiscal years and restructuring costs will rise by £51 million ($67 million). Burberry shares fell 9.1 percent in midday trading in London.
“The market is now being asked to back him in a ‘no pain, no gain’ strategy shift,” Steve Clayton, a fund manager at Hargreaves Lansdown in London, said of the CEO, Marco Gobbetti.
“Early evidence suggests (Gobbetti) has not carried the crowd with him.” Bailey, Burberry’s chief creative officer, said on Oct. 31 that he plans to leave the company in 2018, ending a 17-year stint in which he helped transform the brand into a global luxury icon. He previously stepped down as CEO after struggling to reinvigorate sagging sales in the company’s key Asian markets.
Bailey’s ideas influenced all of the company’s operations, from the fashions on the runway to the mood in the stores and a shift toward online marketing.
He banked on Britishness and incorporated it into the look and feel of the offering.
He turned a company that once made trench coats for World War I officers and tents for arctic explorers into the producer of must-have styles for the likes of Kim Kardashian and Cara Delevingne.
He also championed the digital marketplace with innovations such as allowing shoppers to immediately buy online what they saw on fashion show catwalks.
But that didn’t stop Burberry from suffering a sharp fall in sales in Asia, where slower economic growth and a Chinese government crackdown on luxury gifts hurt the brand’s sales under his watch. Investors looked to Gobbetti to jumpstart the company.
“To win with this consumer, we must sharpen our brand positioning,” the company said in its strategy statement. “This will require us to change our approach to product, communication and customer experience. Building on our strong foundations, we will establish our position firmly in luxury enabling us to deliver sustainable long-term value.”


Indian rupee, bonds slump after cenbank governor’s resignation

In this file photo taken on April 1, 2014, the Reserve Bank of India (RBI) logo is seen on the main entrance gate of the RBI headquarters in Mumbai. (AFP)
Updated 11 December 2018
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Indian rupee, bonds slump after cenbank governor’s resignation

  • The RBI governor resigned abruptly after a months-long tussle over policy with the government

MUMBAI: India’s rupee and bonds plunged following Reserve Bank of India Governor Urjit Patel’s unexpected resignation after market hours on Monday shocked investors.
Concerns about likely mixed results from crucial state elections later on Tuesday also kept traders wary.
The Indian rupee came off earlier lows at 72.1350 to the dollar after opening at 72.46, but was sharply lower from its close of 71.35 on Monday.
The 10-year benchmark bond yield rose to 7.64 percent from 7.59 percent at the previous close.
The broader NSE stock index opened down 1.3 percent but recovered some of its losses and was 0.9 percent lower.
Investors will await state election results for further trading cues during the day.
The RBI governor resigned abruptly after a months-long tussle over policy with the government that has raised concerns about the central bank’s independence as a national election nears.