"Burberry is one of the most trusted brands in the world in terms of the fashion and apparel industry. In many ways, the brand is a precursor of haute-couture in the world. It redefined fashion at a time when clothing was just about the practical applicability, rather than being a style statement in itself. The whole idea and the revolution of fashion in Europe is a gift from trend setting brands like Burberry. Burberry was founded at Basing stoke, England in the year 1856 by Thomas Burberry. Currently, the key people at the helm of the company are John Peace and Angela Phrendts. The Company employs around 6,681 people at all major locations where it has presence. The chief creator of the company is Christopher Bailey. The company has an annual turnover of around 1.27 million. The net income is pegged at around 82 million. The figures have recently slumped because of the extreme competition that it faces in the world market from brands like Armani, Versace, Diesel, Levis and others. This can also be attributed to another factor that may to the fact that the company does not run exclusive outlets but depends on the third party vendors for the sales. Historically speaking, the company is famous for the creation of the trench coat and the iconic checked pattern. The complete idea behind the creation was military in nature, but the trench coat achieved an immense amount of popularity.
Burberry operated under the steward ship of the brands that may be classified as the Burberry Prosum, Thomas Burberry, Burberry sport, Burberry Black and Burberry Blue. Other than the regular apparels, the company is also in the business of other fashion brands such as perfumes. The company has achieved huge success in the field of perfumes in a very short period of time when compared to some of the more established brands. The company had undergone a period of short economic crisis I the early half of the 20th century, but it has slowly recovered to register huge profits. The company follows the policy of premium pricing as it believes that are products are more than just pieces of apparel. They are iconic and tell a story. The association of the individuals with the brand is supposed to increase the brand value of the individuals. It is the accrued benefit for which the consumer has to purchase the good at a premium. The company faces a lot of competition from incumbent players in all markets because of the changing paradigms of fashion. But, it can be confidently said that the heritage and experience of Burberry holds it in good stride. "
[...] ➢ Place: Burberry continues to focus on enlarging its offer of replenishment of products and shifting wholesale operations to retail. Further rationalization of the brand's wholesale distribution network in the US and Europe is planned, which will involve closing down underperforming units and expanding its presence in desirable locations. In the last couple of years, Burberry rationalized its retail network by restructuring underperforming operations and bringing stores in its most strategic locations, such as China, Brazil, and the Middle East, under its direct control. [...]
[...] ➢ Threats: A) The company's business performance is likely to be affected by the ongoing slowdown in the global economy. Due to recessionary economy, consumers are left with lower disposable incomes and tend to reduce their discretionary spending. B) In the UK, the government increased the minimum wage rate from £5.73 per hour in October 2008 to £5.93 an hour in October 2010. It is further expected to increase in the next few years. (Datamonitor, 2011). Thus overall, Burberry Group Plc has dominant market positioning attributed to horizontally diversified distribution network and improving presence in fast moving emerging luxury markets such as China, although the company is facing higher operating expenses (human capital, promotional campaigns, etc) which will slightly hamper margins in 2012. [...]
[...] Europe is the flagship marketspace accounting for 34.9% of total group revenues in September 2011. The company controls 92% of retail outlets worldwide with franchises remaining 8% primarily in Asia-Pacific (Annual Report, 2011). It has highly horizontally diversified distribution network with high dependency on retail and wholesale channels on long-term basis. Burberry Group Plc is publicly listed on London Stock Exchange with market capitalization of £59 million (November 2011). Burberry Group Plc went public in 2002. The three largest shareholders control approximately 20% of equity in 2010-2011. [...]
[...] Burberry Group Plc has long-term dividend payout ratio of 40% of earnings per share. The company paid out dividend per share of twenty pence, i.e., CAGR of 17% (2007-2011). ➢ Society: Majority of companies after adopting scientific management has reduced emphasis on in-house and outside human capital as machines (Smith, 2003). The knowledge era emphasized the human capital importance for improving cutting edge technologies to enhance competitive advantage (Smith, 2003). In 2011, Burberry not-for-profit foundation distributed 2,500 iconic trench coats to affiliate charitable organizations across London, New York, Hong Kong and Seoul catering to the disabled youth population. [...]
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