Good Old Fashioned Fist Fight!

British luxury goods store Burberry enjoyed 24% underlying revenue growth in the first quarter of the tax year.

Burberry is on the rampage around the world and has benefited from its growing presence outside Europe.

Revenues were up 30% in Asia-Pacific and 26% in the Americas, but in Europe they rose only 20% from a year ago.

“We plan to open between 20 and 30 stores in the current financial year, predominantly in the Americas and Asia Pacific,” said Burberry chief executive Angela Ahrendts.

But it’s not due to a weak pound; these latest results are based on the underlying performance, which excludes the effect of exchange rate changes.

So how are they making such good headway when many economies are still shrinking and luxury goods are in reduced demand.

Perhaps they are taking lessons from the past – Burberry isn’t shy of a good old fashioned fist fight.

In the 1990’s Burberry was associated with football hooligans and chavs.  But they, the most British of luxury labels, didn’t seem remotely worried.

The American businesswoman Rose Marie Bravo who was at the helm from 1997 to 2005 of the 154-year-old company grew the business from £200m to a market capitalisation of £2 billion in that period.

Burberry’s strategy of not trying to stop downmarket customers championing the brand prevented it coming across as snobbish.

It reacted in the opposite way to how a luxury brand might have been expected.

The brand has recovered in the UK and their current aggressive marketing, specifically in those new regions of the world; whilst not taking the eye off the ball in Europe, is paying off.

Angela Ahrendts, current chief executive officer went on to say “The clear momentum in the business and our robust financial position together reinforce our confidence to increase investment for the future, while continuing to enhance the brand.”

Aurelie Husson Dumoutier and Emmanuel Bruley des Varannes, analysts with Societe Generale agreed saying  “We believe Burberry is poised to generate the most dynamic growth in the luxury goods sector thanks to an acceleration in capex spending, strong retail expansion and the development of new categories (home, make-up, extension of kids line),”

In testing times – whether you are a luxury brand or small family business it is sometimes necessary to diversify and break into new markets.  It can be the difference between success and failure.

Burberry was founded in 1856 when 21-year-old Thomas Burberry, a former draper’s apprentice, opened his own store in Basingstoke, Hampshire, England.  Most great businesses start small and build solid foundations.

If you have found a hole in your cashflow bucket let us help you plug it – then you can begin to move forward again.

We can get your cashflow restraints off your back so you can start working ON the business and turning it into another great British institution.


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