COVID-19: reduced consumer taste for luxury fashion impacting Burberry
Burberry’s regional performance was explored – its revenue is overexposed in Asia-Pacific, with approximately 40% of sales taking place there, while EMEA and the Americas also provide sizeable shares. There was a “dramatic decline” in Asia-Pacific, particularly Greater China, in Q1 this year. Meanwhile, within Europe and the Americas, the majority of stores have been closed.
Despite the “pretty quick bounce-back” in beauty products within China, the luxury fashion segment is coming back slower. “The overall fashion luxury industry seems to still have a bit of a slowdown because the consumer sentiment is still in the process of returning from panic to normal or to the new normal.” The specialist then discussed what stores could do to help customers feel more comfortable.
To make sure stock is sold, more discounting activity could take place in both the city centre stores and outlets. However, there are pros and cons to the latter. Although it can prove beneficial in the short term, “we also know that a high share of outlet business is diluting brand desirability.” Burberry has not overexposed its outlet segment in Asia, though.
A number of other topics were covered, from the wholesale network to whether Burberry could lose suppliers. The Interview ended with a look at fixed and variable costs, including the scope for renegotiating rent.
To access all the human insights from Third Bridge Forum’s Burberry – Coronavirus Global Implications Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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