(FORTUNE Magazine) Rose Marie Bravo, the CEO of Burberry, is nervous. The hot designer she hired, Roberto Menichetti, is presenting his very first collection to the style press within the showroom of their newly renovated store on Haymarket in London. Bravo's not worried that they'll hate it--the lady who brought Gucci, Jil Sander, and Prada to Saks Fifth Avenue when she was president with the chain is properly conscious of what pleases the average fashion editor. No, she's nervous since she knows turning out a collection that is fabulous solves only one of several company's numerous problems.
During her 1st year at the helm, Bravo produced various other bold moves to try to turn about the sagging Burberry brand: She closed two costly raincoat factories in Britain, sharply curtailed distribution of a lower-priced Gap-like line, and reduce off all sales towards the gray market place in Asia--a move that forced the enterprise to write off $29 million in inventory last year. She also produced a multi-million-dollar investment in updated pc and manufacturing systems. Not terrible for a woman with no preceding knowledge in operating a multinational manufacturer.
Strangely, at the presentation Bravo tries to maintain expectations low. She reminds the press that Menichetti's collection would be the DNA of your new Burberry--not the final solution. Luckily, the genetics are sound: The collection is the talk with the spring 1999 style shows; Women's Wear Each day pronounces Burberry "born once more." Good to hear, but Bravo knows it's going to take considerably additional to make up for the neglect suffered in the hands of its parent business, Wonderful Universal Retailers.
"There's not an aspect of our business that is not going to demand function, perform, operate to acquire it proper," Bravo says. And though mundane, nitty-gritty back-office particulars like costing, manufacturing, and contracts are all new to her, difficult work is not. Her reputation as a workaholic is among the points that created her such an desirable candidate to Excellent Universal Retailers in the course of its seven-month look for a brand new CEO.
GUS, as it really is traded on the London exchange, has not too long ago gone by means of an equally dramatic shift. Lord Leonard Wolfson, the man who ran GUS for the previous 34 years, stepped down in 1996, and his cousin, Lord David Wolfson, took over and promptly began to spend the $3.four billion in cash the organization had on the books for acquisitions in GUS's core corporations of catalog retail and customer data services. Then he turned his consideration to Burberry (the business not too long ago dropped the "'s" for aesthetic reasons), putting it inside the care of one more cousin, Victor Barnett. "I've usually had a belief in the destiny of this brand," Barnett says, making it the newest within a string of international luxury brands like Gucci and Louis Vuitton to attempt a revival. Barnett, who is primarily based in New York, scrapped most of the senior management, and brought in Bravo. Her mission? To do what had once--before the miraculous turnaround at Gucci--seemed impossible: Undo years of brand neglect.
Because it was founded in 1856, Burberry has been synonymous with British tradition, inside the kind of gabardine raincoats lined in that trademark plaid. Analysts say revenues had been growing steadily at about 15% a year because the mid-1990s, with sales reaching a high of $466 million in fiscal 1997. But final spring Burberry reported that sales took an unprecedented 7% hit, dropping to $435 million within the fiscal year ended March 1998. A lot more devastating was final year's 60% drop in earnings, from $106 million to $43 million.
Despite the fact that her drastic moves are partly responsible for all those grisly numbers, Bravo isn't apologizing for them. In truth, the corporation has currently predicted yet another drop in sales for next year; analysts are forecasting that they may very well be down as substantially as $66 million. It really is the cost to spend, Bravo says, to bring a neglected brand back and into the future.
The old management at Burberry--like numerous British brands--had come to depend on exports for development. But Burberry was particularly laissez faire in its method, leaving each nation to create the brand as it saw match. Switzerland sold Burberry watches. Italians have been mad for Burberry's Italian-made men's suits. Korea sold Burberry whiskey. Britain tried Burberry biscuits. "There was no cohesion, no central focus," concedes Barnett, 65. Family ties meant he'd been intermittently involved in Burberry for many years, but Barnett was largely a fashion unknown. Not so with Bravo, 47, who's a brand name herself within the style globe.
Because the president of Saks, Bravo was charged with raising the image in the chain back to a level at which it could compete using the likes of Neiman Marcus and Bergdorf Goodman. Her Rolodex, constructed at Saks and in earlier days at I. Magnin, is a single of her greatest strengths. So is her impeccable taste, although she does not appear like an arbiter of style, preferring blue suits and colorful scarves to the mandatory black in the hard-core fashion crowd. Bravo began at Burberry by carrying out what she does finest: shopping for brand-name talent. The individuals she hired to oversee the men's, women's, and accessories divisions--Stanley Tucker from Saks, Michelle Smith from Barneys, and Robin Marino from Ralph Lauren--were heavy hitters in the New York style enterprise.
But then she had to deal with Burberry's bigger issues: Within the previous ten years, the corporation had turn into overly dependent on Asia; by 1996 more than two-thirds of Burberry sales came from Asians, regardless of whether they have been traveling or at residence. In fact, Burberry has the distinction of being one of many leading 5 international style brands in Japan. It is a distinction that meant disaster when Asia's economies collapsed.
The company's challenges in Asia, even so, went even deeper. Shoppers could purchase an array of Burberry items low-priced due to the fact Burberry was feeding the region's ample appetite for gray goods, that are sold in bulk to off-price retailers, which then sell them at discount. Initially the technique worked for the bottom line, however it became a nightmare, considering that such shops undermine higher-margin, full-price retailers. And because today's luxury shopper is really a globe traveler, the brand's image immediately tarnished too. It took a single trip to Asia for Bravo to determine that gray goods had to go.
Bravo's major mission should be to make Burberry attractive to prospects the company has never ever lured before--the fashion cogniscenti. "We have to get new clientele who will say, 'Oh, my God, I in no way really believed of Burberry,'" says Bravo.
Although she's at it, Bravo's got to avoid alienating the loyal old customers. Bravo hired Vogue photographer Mario Testino to shoot a series of advertisements that feature the unconventionally stunning model Stella Tennant, a nod to Burberry's fashionable new followers, inside a trench coat on the wind-swept moors, a nod towards the old.
The British economic press has reported that Burberry--which accounts for much less than 10% of GUS's profits--will be sold off once it really is repositioned. Barnett insists that is not so, saying that the organization wouldn't make such a massive investment only for the short term. That is fantastic, for the reason that a turnaround of this size is going to take time; analysts warn it may take provided that 5 years, based on what occurs towards the globe economy. Inside the meantime, appear for the Burberry plaid to start turning up in new places--in nightclubs and Harper's Bazaar, on rock stars and runways. Following all, the style world loves absolutely nothing better than an excellent revival.
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Industry indexes are shown in actual time, except for the DJIA, that is delayed by two minutes. All occasions are ET. Disclaimer
LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer.
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The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones Firm, Inc. and have already been licensed for use. All content of the Dow Jones IndexesSM 2013 is proprietary to Dow Jones Business, Inc.We offer the best burberry bag for you with high quality and fine workmanship.Visit our burberry online store! Happy shopping!
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