Burberry Group plc (LON:BRBY)’s digital campaigns boost its style hungry fanbase but Gobbetti’s exit still causes concern
Burberry Is Tapping Into NFTs
"Burberry has a knack of signing up stars to catch the mood of its young and growing fan base. Its campaign featuring Marcus Rashford engaged followers on social media, with its mural of him in Manchester, a magnet for anti-racist campaigners. The company’s cachet has acquired another edge of cool with its Olympia handbag campaign featuring singer FKA Twiggs, London DJ Shy Girl and model Kendall Jenner. This line up helped engagement across social media platforms almost double compared to the previous Pocket campaign. Gaming is the next mission on the horizon, with the company tapping into the fast growing desire for NFTs with its collaboration with mythical games. It’s launching skins and accessories as non fungible tokens for Blankos Block Party, which are likely to become sought after collectables as the gaming and fashion world collide.
Burberry’s ultra-savvy marketing drives are helping the company win new style hungry customers across the world, desperate to get their hands on a slice of the brand and willing to pay full price for the privilege. There was an acceleration of full price purchases in the first quarter, with 26% growth in like for like sales. In American and mainland China those sales more than doubled and in Korea they shot up by 90%. Making a heel turn away from in store markdowns and reducing outlets was a risk, but it’s paying off for the company.
Overall like for like sales were up 1%, compared to pre-pandemic levels, which may not seem a high headline number, but it’s impressive when you consider that 11 stores remained closed, 35% of shops were operating on reduced hours and international tourism still hasn’t rebounded. When travel restrictions are lifted, its new London Sloane street flagship is likely to become a major draw.
The Departure Of CEO Gobbetti
Online purchases are helping to make up the slack for now, with full price digital sales doubling over the period. When the company is firing on all cylinders once more, there is good potential for growth across all channels. However with new variants still disrupting economies around the world, there is still uncertainty ahead. Europe is still a weak spot for the company, with comparable store sales still sharply lower than two years ago.
A big obstacle waiting to trip up the company on this catwalk of recovery is the departure of CEO Marco Gobbetti. He has been seen as the turnaround Czar for Burberry and investors are questioning the company’s ability to keep driving through the strategic turnaround without him in the front row. Finding the right replacement to fit his large shoes won’t be an easy task. Shares were down 2% with investors still uncertain about the direction of the company in the age after Gobbetti.’’
Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
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