Burberry beats the luxury slump — by not really being luxury

{"text":[[{"start":4.3,"text":"Like a cashmere scarf, gloom encircles the luxury goods market. But not at Burberry: the UK group’s shares rose as much as 10 per cent on Thursday as it reported better than expected sales and operating profit growth. An investor who bet on Burberry this time last year has lost about a tenth of their money, but they would have lost almost 40 per cent at LVMH and Kering."}],[{"start":26.96,"text":"How is the famous check brand staging a comeback even as the grandes dames of high-end fashion lose their edge? The first reason is that Burberry isn’t really luxury, or not as much as it might once have claimed. While its upmarket rivals have made exclusivity ever more expensive — by July, average prices of a basket of select products at top luxury houses in France had risen more than 60 per cent since 2019, according to HSBC — Burberry has gone the other way."}],[{"start":55.56,"text":"After past episodes of sliding viciously downmarket around the turn of the century, and later overcompensating by trying to vie with Gucci and Balenciaga, Burberry has found a sensible medium. It is now courting a wealthy but wide pool of consumers, and its cheapest women’s handbags cost less than half what they did in 2023. For nearly a decade, average annual price rises on Burberry’s hallmark Kensington trench outpaced even those on the Hermès Birkin, before Josh Schulman took over as CEO in July 2024 and put increases on ice, Berenberg research shows."}],[{"start":null,"text":"

"}],[{"start":90.72,"text":"That positions Burberry neatly to pick up customers whom others have lost — and happily for Schulman, there are many of those. The global luxury market has lost roughly 50mn customers between 2022 and 2024, on Bain & Co estimates. Burberry is also small enough to turn others’ tiny losses into fairly big gains. LVMH is expected to bring in 3 per cent less from its fashion and leather goods division this year than last — a €1.2bn hit. That’s equivalent to about 40 per cent of all the sales Burberry is expected to make this year."}],[{"start":124.76,"text":"To an investor, being genuinely luxurious is less important than having luxury-style finances. Burberry increasingly does. Analysts expect the company’s revenue to grow by almost 6 per cent a year for the next three years, according to Visible Alpha, compared with less than 4 per cent at LVMH’s fashion division. Its gross margin — a useful proxy for pricing power — is forecast to come within a percentage point of Hermes’ within three years. On that score, Burberry is close to beating the mega-maisons at their own game."}],[{"start":162.6,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794559283_1924.mp3"}