Displaying items by tag: Marco Gobbetti

Tuesday, 18 February 2020 10:10

ChicGeek Comment The Coronavirus COVID-19 Effect

Coronavirus covid 19 effect on luxury brands fendi maskWhen China sneezes, the world catches a cold. So, when China caught the new coronavirus, or COVID-19 virus, there was going to be major economic repercussions. With the world’s second largest economy on virtual lockdown, its effect on both domestic and international sales for fashion companies will be seismic.

While there is no way to predict how long it will take to runs its course, companies have already started to make tentative statements about how it is affecting their bottom line. Those companies heavily reliant on the Chinese market and high spending Chinese tourists will be particularly affected and be crossing their fingers that this is over quickly.

Left - Fendi - FF Silk Face Mask - £170 from Luisa Via Roma 

While it is hard to predict the length of the outbreak and its impact, we can look back at the last major virus outbreak, SARS, which originated in China in 2002. It's thought that this strain of the coronavirus usually only found in small mammals mutated, enabling it to infect humans in the same way as COVID-19 has. By the end of the nine-month long SARS outbreak, the virus had spread to several other Asian countries as well as the UK and Canada, killing 775 and infecting more than 8,000 people.

The current stats for COVID-19 are 71,499 confirmed cases and 1,776 deaths, that’s a 1 in 40 death rate compared to over 1 in 10 for SARS. In terms of stats it looks less serious, with many people being carriers and displaying no symptoms. The under reporting of Chinese authorities has been questioned and how they are trying to minimise the severity of the outbreak, but they seem to be taking swift action to prevent contagion. 

The world in 2020 is very different from 2002. The Chinese are travelling much more and have become some of the world’s highest spending tourists. In 2005, there were 95,000 Chinese visitors to the UK, in 2018 that number had reached 391,000 and was continuing to grow. Chinese tourists make up the largest share of visitors to the UK (32%) and they have one of the highest average spends of any national group. In 2018, the latest set of statistics, the average spend of a Chinese tourist in the UK amounted to £1,373. They were only surpassed by visitors from Qatar and UAE.

In London’s West End, accounting for a quarter of all non-EU tax-free spend in 2018, on average, Chinese customers spent £1,630 per shopping trip, making them 59% more valuable than other international shoppers.

Hong Kong-based airline, Cathay Pacific, has already cut 90% of its capacity into mainland China and announced that overall capacity would be slashed by 30% as a result of falling demand related to the outbreak. British Airways announced that it would temporarily suspend its flights to mainland China, following the UK Foreign Office’s advice against all but essential travel to the country.

The most visited country in Europe was France with 2.2 million Chinese nationals visiting in 2018. Paris was already having to contend with transport strikes and gilet jaunes protests and now one of its most valuable visitors is staying away. The same could be said about Hong Kong; months of riots now followed by COVID-19 will have taken its toll on this important luxury retail location. The majority of the world’s major cities will be affected by the lack of Chinese tourists.

For British luxury giant, Burberry, Chinese consumers account for 40 per cent of revenues worldwide. Burberry Group plc released a statement at the beginning of February saying, “The outbreak of the coronavirus in Mainland China is having a material negative effect on luxury demand. While we cannot currently predict how long this situation will last, we remain confident in our strategy.” said Marco Gobbetti, Chief Executive Officer.

Currently 24 of Burberry’s 64 stores in Mainland China are closed with remaining stores operating with reduced hours and seeing significant footfall declines. This is impacting retail sales in both Mainland China and Hong Kong “The spending patterns of Chinese customers in Europe and other tourist destinations have been less impacted to date but given widening travel restrictions, we anticipate these to worsen over the coming weeks.” the statement said. Burberry was planning to hold a fashion show in Shanghai in March but that has been put on indefinite hold, while Chanel has cancelled its May Métiers d’Art show scheduled for Beijing. 

Coronavirus covid 19 effect on luxury brands off white mask

Estée Lauder gave a recent update to the markets saying it it expects adjusted earnings of $5.60 to $5.70 per share in 2020, down from a previous estimate of $5.85 to $5.93 citing the coronavirus. Fabrizo Freda, Estee Lauder president and chief executive, said: “The global situation will also affect our financial results in the near term, so we are updating our fiscal year outlook. We will be ready to return to our growth momentum as the global coronavirus is resolved.”

Other brands who have focussed on growth in China will feel the effects. Luxury outerwear brand, Moncler, warned that footfall at its stores in China had plunged 80% since the coronavirus outbreak and it earns 43% of its total revenues from Asia. Michael Kors and Versace owner Capri Holdings saying it would take a $100m hit from coronavirus in China, where it was forced to close more than 150 stores.

Right - Off-White - Logo Print Face Mask - £65 from Farfetch

Kering makes 34% of its sales in Asia Pacific, excluding Japan. Kering’s chief executive officer, François-Henri Pinault, said - on the 12th February - the group - Gucci, Saint Laurent, Balenciaga, Bottega Veneta - had experienced a strong drop in sales over the past 10 days. Many of the group’s stores in China are closed or running reduced hours. The company said it will halt advertising spend and postpone new openings in China in the near-term in a bid to limit the damage caused by the virus. Pinault said that planned product launches might also be reconsidered and is also shifting inventory to other regions to make sure stocks don't pile up in China. Without giving an estimate for any impact from the virus on earnings, he said online shopping was not really making up for the decline in store footfall. "The warehouses are shut. People can place orders but there are no deliveries," he said.

While being strong in China and in the Chinese market has been a boon for many years, this outbreak shows the danger of having all your eggs in the Chinese basket. Once a high growth area, this is a double whammy for brands; you have the domestic market closed and the free spending tourists are no longer shopping. 

China’s growth was already slowing, but it was just about to come out of the trade wars with America. Even if this outbreak is over in a relatively short window of time, it’s the momentum it has lost that will take the longest time to get back. Getting those Chinese tourists to rebook their flights and travel plans, brands reworking expansion plans and product and consumers getting that feel good factor to spend will take months to correct. Many brands are downplaying the current impact to protect their share price. Hopefully, the epidemic will be over shortly, but the repercussions of COVID-19 will be felt by the fashion industry well into 2020.

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Published in Fashion
Thursday, 16 May 2019 14:33

ChicGeek Comment New Burberry Working?

Is new burberry working? Gigi HadidArguably the finest looking retail street in London, Regent Street’s sweeping thoroughfare is home to the world’s largest Burberry store. The former theatre and cinema is a huge, cavernous stage for the only domestic luxury mega-brand the UK has. What you’ll notice recently, as you walk past, there is never anybody in it. Worryingly, the store always looks empty of customers, and, as is often the case in fashion, you don’t need to see financials or figures to see whether something is instinctively selling or not. 

After two distinctly underwhelming, but vast collections under new Creative Director Riccardo Tisci, the first results are in and it doesn’t bode well. Sales are flat in a market that has seen stellar performances from Kering and LVMH. Burberry’s sales grew by just 2% to £2.7B over the year to March 2019 with an adjusted operating profit of £438m. According to Bain & Company, the luxury goods and experiences market grew by 5% in 2018 and to put this into further context, LVMH was up 10% and Kering was up an incredible 26.3% over the same period.

Left - Gigi Hadid in Burberry's latest campaign. The collection could easily be confused with Fendi

After Burberry’s huge growth under previous Creative Director, Christopher Bailey, the brand’s new strategy is to take the brand more upmarket and completely change the feeling and identity of the brand. Marco Gobbetti, Chief Executive Officer, who hired Tisci, puts a positive spin on it in the brand’s latest financial release, “We made excellent progress in the first year of our plan to transform Burberry, while at the same time delivering financial performance in line with expectations. Riccardo Tisci’s first collections arrived in stores at the end of February and the initial reaction from customers is very encouraging. The implementation of our plan is on track, we are energised by the early results and we confirm our outlook for FY 2020.”

The two stores Burberry had in Knightsbridge have closed and are now a trashy souvenir shop and while they said they are taking a new store above the Tube station, it is a long way off from opening with only the facade currently standing.

The only hope is that they are still selling in China. There was a report in Jing Daily, the leading digital publication on luxury consumer trends in China, in April, that said Burberry had shut down four retail stores in Shanghai since August 2018, with the latest closure occurring on March 31, when the brand ceased the operation of its flagship store at the city’s L’Avenue, which it opened in 2013. The article said “the company had been laying off Chinese staff in preparation for the closure until only seven of them remained”. The publication also said the permanent closure of the L’Avenue store represented a “landmark event” in Burberry’s perceived exit from Shanghai. 

According to the results, in Asia, it’s seen low single digit growth in Asia Pacific, Korea and China, stable in Hong Kong and declining in Japan. Which is worrying. Burberry is also cutting costs to shore up the balance sheet.

The company is pinning all its hopes on the new Tisci product. The statement said “The first deliveries of Riccardo Tisci’s products arrived in stores at the end of February. Although it is currently a small portion of our offer, the initial reaction from customers has been very positive with sales of the new collections delivering strong double-digit percentage growth.” It’s not clear what the growth is in comparison to.

The company says it is currently on a multi-year journey to transform and reposition Burberry. “FY 2019 and FY 2020 are foundational years where we will re-energise the brand, rationalise and invest in our distribution and manage through the creative transition, after which we will accelerate and grow.”

In retail, they say they are focused on refreshing flagship stores, with over 80 retail doors expected to be “aligned” by the end of FY 2020. "To ensure we are focusing our resources on the most impactful locations, we will also be closing 38 smaller, non-strategic retail stores in secondary locations. In wholesale, we stepped up our wholesale rationalisation in the second half of the year, phasing out non-luxury doors.” says the financial statement. In total, Burberry closed a net 18 stores (seven mainline, nine concessions and two outlets) in the year and new openings included the relocation and expansion of the Dubai flagship and openings in Shin Kong Place, Xian (China). Fourteen retail stores had been aligned to the new aesthetic by the end of the period. 

Tisci’s first collection ‘Kingdom’ hit stores in February, but it didn’t create the much needed desire within the fashion community which ripples out to consumers. In that period, we’ve seen Givenchy fly, Gucci continue to power on and Bottega Veneta get a new designer and start to make waves. Unless you make positive gains from the energy around a new star creative designer, the energy quickly falls flat and the new Burberry seems to have been striped of identity during its rebrand. 

Riccardo Tisci’s and Christoper Bailey’s Burberrys were always going to be very different. One was incredibly successful and turned the company into a global, billion dollar player, the other, was a fresh start, hoping to equal the growth and appeal of its predecessor but with a new, more street-like aesthetic while trying to elevate the brand. 

Burberry feels like a brand going into reverse and unless new collections start to create some form of excitement people won’t be willing to pay more. The momentum it has built up over the past decade will disappear and it will be a tough job to get that back. This feels like a brand to ‘sell’ before the evidence of the failure of this new strategy becomes even clearer.

Published in Fashion
Monday, 17 September 2018 17:34

ChicGeek Comment Burberry’s Reboot The Verdict

Burberry SS19 review Riccardo TisciBurberry has opted to put all its checked eggs into Riccardo Tisci’s basket. Before a single collection, except for a couple of teaser T-shirts, they’ve changed the logo - 2018 is the year of the bland, officially - found an old monogram in the archive - plastered London (& the world) with it - and really committed to this creative director before a single industry or customer reaction.

Unlike Gucci, who rushed out a quick collection with Michele, and tested the water, this has had a six month build up. Need I remind you what happened at Roberto Cavalli or Brioni when they changed everything for a new creative director.

Left - Burberry's new monogram from the archive

Following the departure of Christopher Bailey - more here - whose rainbow swan song ended an era when Burberry was a fashion leader. The winds of fashion changed, Burberry was no longer as relevant and it’s been playing catch up recently. 

Control, alt, trenchcoat?! The new Chief Executive, Marco Gobbetti, previously at an accented Céline, inserted Tisci, whom he worked with at Givenchy. and proclaims to want to ‘elevate’ the brand and take it away from ‘accessible’ luxury. I’m not sure how accessible the current £1500 trench coats are, btw?

Burberry review Riccardo Tisci

The stock market likes the idea - the share price is up 20% so far this year - and is salivating at the higher prices and bigger profits these more expensive items should generate. If only fashion was that simple.

Cut to Vauxhall, and the first show from Tisci’s new ‘B Series’ Burberry. You can shop his first pieces now – available for 24 hours, only on Instagram.

Right - New Burberry projected onto Global Harbor, Shanghai

First impressions is, it’s big - 133 looks (crazy) - but doesn’t have a clear viewpoint. I would have done a smaller collection - say 40 looks - and kept its message very focussed, strong and styled. 

It looked like a Parisian’s take on Burberry, and maybe something Phoebe Philo would have done, if she’d got/wanted the job. It’s probably too tasteful for the current Burberry customer; they want more check and logos. People go to Zara for these types of clothes, these days. When people buy ‘designer’ they want a statement, they want a recognisable piece and there didn’t seem to be much of that here. 

If Burberry wants to do clothes like this, at these prices, then the quality and cut needs to be flawless. There was a couple of nice takes on the trench. I liked the silk scarf details on one.

Burberry menswear SS19 review Riccardo Tisci

Brands need to highlight something they’re getting behind for that season, be it a bag or a type of coat, and really ram it home. I couldn’t see any key bag styles, and, if they’re going to elevate the brand, like they hope, then it will all be from accessorises to drive the revenue growth.

The male models, with their 80s gelled back hair, had touches of Tisci’s Givenchy in the baggy sweat shorts and luxury sportswear, but there was nothing here you couldn’t get at Boss or Louis Vuitton.

Left - Armed with an umbrella, but where was the Britishness? Burberry SS19 Menswear

I was expecting the new monogram to be on everything, it wasn’t. I feel like that’s a mistake, no matter how tacky it could be. It would be a major sales driver in the all important Asian market and I’m sure we’ll see more in these ‘drops’ of collections we keep hearing about. There could have easily have been a logo segment in this huge collection.

It was chic, at the beginning, with some nice detailing, then the men’s section arrived, and then it got all confused towards the end. Sadly, these aren’t the type of clothes you’ll be thinking about until they come out, there’s just too much good competition.

Published in Fashion
Tuesday, 31 October 2017 12:21

ChicGeek Comment Ode To Christopher Bailey

Christopher Bailey to leave Burberry tribute

News just in - Burberry president and chief creative officer, Christopher Bailey, who has been with the Burberry brand for 17 years, will stand down from its board in March 2018 and work with CEO Marco Gobbetti and team on a transition period until December 2018.

When Burberry’s renaissance began in the late 1990s, it was the perfect time to turn around a recognisable British name, dust it off and grow it into the new desire for luxury and branded products. We’d witnessed it at Gucci, under Tom Ford, and other languishing brands were thirsty for the same.

Burberry initially started with the Italian designer, Robert Menchetti. That didn’t last long and was soon replaced by an unknown designer, Christopher Bailey. 

Left - Christopher Bailey who turned Burberry into the billion dollar business it is today

Initially, and this was pre-Google, so you can forgive me, I thought it was the same Chris Bailey who had started Jigsaw Menswear and the soon-to-be defunct Uth. A great designer and businessman, I thought it was a perfect fit.

I quickly realised they were different people and I bought a shirt from that first 2001/02 collection. Admittedly, it was in the Harrods sale and it was very expensive, if I remember, and I still have it. It was in a stretch, striped fabric, one I hadn’t seen before, with metal Burberry branded buttons and epaulettes. There was something beautiful yet innovative which became the signature of the new Burberry.

I quickly became fan. Every collection had a strong theme and the pieces were well designed and had that all important desire factor. The brand got bigger, the shows became fancier and major events with Christopher Bailey overseeing every detail, from store fits to the music to the Testino campaigns.

Those Bill & Ben hats, the paisley collection and then there was the coats with the leather arms which are still yet to disappear off the British high-street.

Bailey is one of the greatest Creative Directors of our time. He’s up there with Tom Ford for a progressive and consistent luxury handwriting. Burberry’s growth and success is down to his balance of updating Britishness while respecting the past and knowing exactly what consumers want now.

While the average Burberry customer probably doesn’t know or care who Christopher Bailey is, for us fashion folk, we like to see the whites of the eyes of those designing and leading the brands we look at.

Seventeen years in fashion is a lifetime, especially today, and while “See Now, Buy Now” pushed him into a creative cul-de-sac, Bailey produced some great clothes and images.

I think he’ll probably take a break. Burberry has made him a very rich man. But, it is exciting what this talented man decides to do next. Perhaps he’ll join Angela Ahrendts at Apple, maybe a bigger fashion job such as Louis Vuitton, his own label or maybe something really radical like Amazon. Who knows?

See more Burberry related comment pieces:

Time to Ditch “See Now, Buy Now” here

Choose Your Rip-Off here

Published in The Fashion Archives

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