Burberry is a global luxury brand offering menswear, womenswear, childrenswear, coats, dresses, shoes, accessories, bags, scarves, beauty and fragrance. The quintessentially British brand was first founded as an outerwear brand, well known for it’s iconic Burberry trench coat and distinct tartan print.
The brand has over 497 directly operated stores and concessions operating in 32 countries; and via a third-party distribution network- 70 franchise stores in an additional 28 countries and approximately 1,400 wholesale department and specialty store doors in over 80 countries (as at 31 March 2014). The brand continues to develop its presence in existing and under-penetrated markets.
Burberry was founded by Thomas Burberry in 1855 in Hamphire England and remained an independent company until 1955, when it was taken over by Great Universal Studios (GUS). In 2005, GUS divested its remaining interest in Burberry. Burberry Group PLC was initially floated on the London Stock Exchange in July 2002.
In 2013/2014, Burberry had a turnover of £2,330 million (up 16.5% from the previous year), recording a profit before tax of £461 million (up 7.7% from the previous year). The company employs 9698 employees across 34 countries and is headquartered in London.
The accounts are presented in GBP, which is Burberry’s functional currency. It is listed on the London Stock Exchange under the ticker BRBY with a market capitalization of GBP6822.43 Million.
The consolidated financial statements have been prepared in accordance with IFRSs as adopted by the EU. The accounts have been audited by PricewaterhouseCoopers LLP with no reservations.
On the management side, the most significant change is the departure CEO Angela Ahrendt in April 2014 who left Burberry (to join Apple). Ahrendt the CEO since 2006 has lead the successful transformation of the company, tripling revenue three-fold during her tenure. Ahrendt was succeeded by Christopher Bailey, Chief Creative Officer (CCO) who has been with Burberry since 2001. Bailey holds the roles of CEO and CCO and his appointment as CEO is considered a natural progression. Other important changes include, the changes of the CFO and COO, and the appointment of three new non-executive directors. The new board appointments focus on evolving the Board’s relevant skills and competencies for the future under its succession plan.
THE BUSINESS ENVIRONMENT
After three years of double digit growth, analyst estimated that the luxury sector growth slowed to 2% in 2013. This was in part due to a slowdown in China (the world’s 4th largest luxury market), in light of government policy changes on gift giving and the Chinese consumer increasingly shifting luxury consumption abroad (which has in turn help drive luxury sales in the rest of Asia and Europe). Whilst Burberry is a luxury brand, note that it’s growing beauty and fragrance lines are “attainable” luxury and has the capacity for resilience in unfavourable economic conditions. Burberry’s five strategic themes which have sustained its growth during the period include:[1: Claudia D’Arpizio, Bain Report: Luxury Goods Worldwide Market Study Spring 2014 ]