Even 4 Stores, Burberry To Control Costs Or What?

What? Burberry closed another shop in Shanghai?

Recently, the Beijing Commercial Daily reporter learned that the flagship store of Burberry Shanghai SHANG Jia center was officially closed in April 1st.

In fact, this is the fourth store that Burberry has closed in Shanghai recently.

01

Burberry 4 stores in Lian Guan, Shanghai

Insiders pointed out that the most important reason for brand closing is that enterprises should control their costs through their control, and in the case of declining performance, closing stores is the most direct way.

Reporters then called Burberry Shanghai SHANG Jia Center store, but no one answered.

Burberry customer service staff said, SHANG Jia Center store has closed shop, whether the future Beijing store will be closed, has not received group notice.

For the reason of closing the store, Burberry responsible person said he had sent an email to the British headquarters, but has not yet replied.

As of press release, the responsible person did not give a response.

It is understood that in early April, British insiders told the media that the group would close the store in Shanghai's SHANG Jia center, and that the company continued to lay off workers in disguised form until there were only 7 employees left before closing the store.

In addition, some sources told the media that after the closure of the store, all employees were expected to be dismissed.

Until the deadline, no response was received.

In fact, this is not the first store that Burberry closed in Shanghai. In addition to the flagship store of Shanghai's SHANG Jia center, which has just been closed, Burberry has closed three stores in Shanghai within a year.

According to Burberry China official website, there are four stores in Shanghai besides SHANG Jia center.

Compared with last December, Burberry's boutique has decreased from 52 to 46.

In recent years, the performance of Burberry has not been satisfactory.

In the past year, Burberry's share price has continued to decline, and even news that the brand will be acquired.

In January, according to the three quarter performance report released by Burberry group, the group's retail income fell 2% to 711 million pounds by the fixed exchange rate in the 13 week as of December 29, 2018, which is 1% higher than that of the store sales.

Public data showed that in the financial year ended March 31, 2018, Burberry closed 34 stores worldwide, and opened 14 new stores, closing 20 stores, including 6 online shops.

"The most important reason for brand closes is that enterprises must control their costs, and in the case of declining performance, the most direct way is to close stores," said Kang Lan Xin, director of the school of dress and collocation, told the Beijing Commercial Daily.

"Another possibility is to adjust the brand.

With the continuous layout and development of the business district, the old storefront may not be in line with the needs of the brand positioning.

02

China's growth is worrying

In 2018, Burberry paid a financial report, though its performance remained stable, but it failed to satisfy investors in the luxury market that has recently warmed up in China.

In the past 13 weeks as of June 30, 2018, Burberry sales increased by 3%, slightly lower than the 4% increase in the same period last year.

The total retail revenue is 479 million pounds, which is basically flat compared with the same period last year.

On the day of the earnings announcement, Burberry's share price fell by 5%, mainly because the Asian market did not meet the expectations of investors.

JohnGuy, an analyst at MainFirst, even gave a rather bleak judgment to describe its performance in China.

According to the financial report, China's sustained demand for Burberry windbreaker, handbags and other products only brought in the median growth.

Sales in the North American market recorded a high single digit growth.

Sales in Europe, the Middle East, India and Africa have declined, mainly due to the weakness of tourism in Britain and Europe.

In addition, Burberry said in its earnings report that the group's digital business grew strongly, especially in the Asia Pacific region.

Burberry did enter the digital channel very early in China. In 2015, Burberry opened its flagship store in Tmall, and released the interactive content and behind the scenes story on WeChat platform before and after the fashion show.

In order to win over young Chinese consumers, Burberry signed Wu Yifan as the first non British spokesperson of his brand.

However, Burberry has failed to keep pace with changes in China's luxury consumer groups.

03

Riccardo Tisci's appointment

Can the brand be safe?

Although Burberry CEO Marco Gobbetti and star designer RiccardoTisci have made efforts to improve their performance after taking office, it is still unknown whether the two will become the 100 year old Savior.

According to Bloomberg data, Burberry ranks the lowest among analysts in the ten largest luxury and apparel companies in Europe. 16 of them are recommended to hold, 4 are recommended to sell, 3 are recommended to sell, 3 are buying, Gucci is the first group to open the cloud, followed by the group of LVHM.

In 2018, Burberry's stock price fell by 4.6%, which was comparable to that of the mid term group's chief executive, MarcoGobbetti, when he took office in 2017.

Therefore, some analysts believe that the continued weakness of stock prices may eventually make Burberry a new acquisition target for other giants.

Flavio Cereda, an analyst at the British Jie Fu International Limited, said in an interview that MarcoGobbetti took over a very challenging situation.

"If all goes well, there may be some positive signs at the end of 2019, but when the market slows down, Burberry's performance will pick up or take longer."

In addition, despite the enthusiasm of the creative director RiccardoTisci for Buberry in social media or as an indicator of future performance, there is still a lack of strength, and whether the enthusiasm of the social network can lead to a leap in performance or a question mark.

After Burberry announced the appointment of Riccardo Tisci in March 12, 2018 to replace ChristopherBailey as the new creative director, its share price rose and reached a high level in August 28th.

But after the collapse of the global market, investors worried and their shares fell again.

But Burberry is confident, and tells analysts that they need to be patient.

Burberry, which is to be revived, is facing a key turning point with the cooperation of the new CEO Marco Gobbetti and the new creative director Riccardo Tisci.

After taking office, the two men took some actions, such as raising market positioning to high-end luxury goods, adjusting Logo, burning stock, closing shop, reducing weight, designing younger, offering and VivienneWestwood cooperation series, but this is just the beginning.