At the flagship Burberry store in London's New Bond Street, the well-heeled customers are flocking in. Women head for the £279 handbags and the £155 umbrellas. The men are eyeing the £45 swimming trunks in the trademark Burberry check and the £65 floppy hats favoured by Liam Gallagher. Some overseas shoppers sign the guestbook, prominently displayed on the large wooden table designed by Viscount Linley.
In a corner, a couple of girls are giggling at the £39 poodle waistcoats. Upstairs, parents-to-be are admiring the custom-made Burberry Silver Cross prams at £2,500 each. Yes, Burberry is hot, hot, hot. This is a brand that is "to die for" among fashionistas such as Kate Moss and the newly Brit-friendly Madonna but which has also crossed over to achieve mainstream appeal.
And yet it is not only a fashion revival. It is a commercial success story. Yesterday Burberry reported trebled profits of £69.5m on almost-doubled sales of £425m. And the company's owner, the retail group Great Universal Stores, confirmed plans to seek a separate stock market listing for Burberry within the next 12 months. The float should value Burberry at around £1.5bn.
How did this revival happen? How did a brand synonymous with dire raincoats bought by Japanese tourists become the hot fashion choice of the glitterati? Much of the credit must go to Rose Marie Bravo, the 49-year-old fast-talking American appointed as Burberry's chief executive in 1997. She joined from Saks Fifth Avenue, the US retailer where she was the $1.6m-a-year president.
Slim, elegant and wearing a crisply cut aubergine two-piece and wickedly pointed black shoes, she sweeps through the recovery programme breathlessly. "Burberry was basically a raincoat manufacturer primarily serving Asian clients," she says in a heavy New York accent. "It had a disparate network of licensees marketing Burberry around the globe. It wasn't a coherent business. Each country was representing its own version of Burberry. Demand slowed. The business needed a clean-up. The brand was over-exposed and over-distributed. So we got ourselves into the right kind of stores and developed an expertise in a variety of new products beyond just raincoats. Rainwear was the bulk of the business. We wanted to get our share of womenswear. Accessories have the highest margin potential." Looking at the £45 ties and the £55 belts in the swish Bond Street store, she has a point.
Ms Bravo recruited Roberto Menichetti as design director and his flair gave Burberry the catwalk cred that attracted the supermodel set. When he left earlier this year he was replaced by Christopher Bailey from Gucci. The average age of a Burberry customer has fallen from 50-plus to mid-30s.
A key part of Burberry reinvention was the extension of the product range. Shoes, swimwear and jeans have been launched. And a Burberry Touch fragrance initiated last year has already achieved sales of £40m in nine months. Lotions and baby ointments are on their way, as is children's wear, where Ms Bravo has high hopes.
"We have an adorable children's line, principally for the under-twos," Ms Bravo says. "We tried a specially made Silver Cross pram with a Burberry design at £2,500 and there was a lot of interest in it. That made us think we could do well with children. The brand is so elastic that we can go from baby to grandfather and everything in between. Shoes are new, for example. We did sneakers and then mules. Now we realise we have a real demand for shoes."
Another central plank of the recovery has been the revitalisation of the store portfolio. Burberry has 58 stores and is expanding fast. The London flagship store was opened in August and has exceeded expectations. The London model was also used for the new store in the Ginza district of Tokyo, which opened last December. The size of the New York branch will be doubled by August 2002. "We improved the London, New York and Tokyo flagships first," Ms Bravo says. "After that we knew we could expand."
There are plans for renovations or new stores in Beverly Hills, Chicago, Dusseldorf and Paris this autumn. The company is also looking for a Spanish flagship in Barcelona. Milan and Miami are other possibilities. The franchise network has also been simplified. Burberry bought out its Spanish licensee last year and the business contributed £17m of profit on £118m of sales in the nine months since the deal. Burberry is looking at a similar approach in Asia where its existing licensing and distribution agreements come to an end in December. Burberry plans to take control of them from January 2002 in a move which should give Burberry a greater share of profits.
The main worry for Burberry's future is that its high-fashion status fades and that when Kate Moss and co move on, the high-street wannabes will do the same. Some would say, for example, that the Burberry check handbag has already become something of a cliché. Ms Bravo is aware of the challenge. "One has to constantly innovate. You can't rest on your laurels and you can't be predictable."
Indeed, Ms Bravo is so aware of the dangers of over-use of the Burberry check that she has coined the term "check management" to address it. "Last autumn everyone was very interested in logos so the check was very prominent. This autumn the check will be used principally for lining or small details."
A look around the Bond Street store proves her point. Though the check tends to catch the eye, large parts of the range are check-free zones. Indeed GUS says the check is featured on only 20 per cent of the range.
MS Bravo also dismisses talk that the appeal of luxury brand such as Louis Vuitton, Gucci and Prada may eventually wane. "We like to think of Burberry as accessible luxury, where people can buy into it at various price points," she says. "As long as we deliver the quality for the price then I believe there will always be people willing to pay for something that is well made and well done. People love well-designed clothes. And the Britishness is something we like to hang our hat on."
Indeed the Burberry raincoat is making a comeback, albeit in a new guise. "We are going into vintage raincoats," she says. "We buy up old Burberrys from flea markets, rebuild them and sell them. They are part of our heritage."
Ah yes, the heritage. There is plenty of it at Burberry whose history dates from 1856. Then, 21-year-old Thomas Burberry opened his first clothing shop in the little-known design Mecca of Basingstoke, Hampshire. In 1879 he developed the gabardine fabric and in 1901 he designed the Burberry raincoat. The company floated on the market in 1920.
Great Universal Stores bought Burberry in 1955. Then GUS was an old-fashioned family business run by the Wolfson dynasty. And only when Lord Wolfson of Sunningdale, then chairman of Next, was appointed head of GUS in 1996, did the potential of Burberry begin to be uncovered. Lord Wolfson who appointed Rose Marie Bravo and gave her the backing to shake up Burberry and put the brand back on the map.
Retailing has been in Ms Bravo's blood. Raised in the Bronx district of New York by an Italian mother and a father who was brought up in Italy, she started work in her father's hairdresser's shop and later worked at Macy's, the famous New York department store. Has Burberry's been everything she expected? Hardly. "Could we have foreseen the Asian crisis? Sales in places like Korea just dropped to zero. And there were lots of things we hadn't realised that needed to be addressed."
Now she has 12 months at most to groom Burberry for a stock market flotation. GUS, which plans to float a maximum of 25 per cent of the equity, wants to ensure it has beefed up Burberry's management and started to achieve some of the potential of the new stores and the new product lines before launching Burberry as a separately quoted company. This would appear to push a Burberry float to next spring.
GUS says its caution has already paid off. It joyfully reminds the City that many analysts were pushing GUS to flog Burberry for a knock-down £300m only a couple of years ago. Though some analysts would have preferred a full float or a sale to another retailer or luxury brand group, few question the achievement so far.
And if Burberry can keep riding high in the fashion stakes, its flotation should not be a tough sell. Indeed, if Ms Bravo decides to feature a neat little detail of Burberry check on the share certificates they will probably sell like hot cakes.Reuse content