By  on May 17, 2018

LONDON — Ahead of Riccardo Tisci’s runway debut in September, Burberry said it has been making strides across the business with a focus on accessories, retail stores and a more frequent rhythm of deliveries that surpasses the brand's see-now-buy-now runway strategy.On Wednesday, chief executive officer Marco Gobbetti updated the markets on his plans and laid out the 2017-18 results at Horseferry House, the company’s London headquarters. It was the first time since November that he addressed analysts and media — and what a difference a few months makes.With his pick Tisci now installed, Gobbetti was more bullish than ever about Burberry’s potential. His mood spread to the markets, with the firm’s shares closing up 3.6 percent to 18.68 pounds on Wednesday after it reported that retail sales, which account for the bulk of Burberry’s business, were up 3 percent on a comparable basis, despite a net 20 closures in the 12-month period.The company's sales of 2.73 billion pounds were 2 percent higher than last year, excluding wholesale revenue from beauty. As reported, Burberry’s in-house beauty business became a license partnership with Coty Inc. in October, midway through the fiscal year. Including the beauty wholesale numbers, sales were down 1.2 percent.“Riccardo is one of the most talented and influential designers of our time, and his skill in blending streetwear with high fashion is highly relevant to today’s consumer. He’s also embraced the British spirit of the company, and I’m really enjoying working together with him again,” said Gobbetti.Burberry is an encore for the two Italians: It was Gobbetti who handpicked Tisci as the creative chief at Givenchy, and they transformed the brand into a star in the LVMH Moët Hennessy Louis Vuitton stable.Gobbetti said Tisci has been working across all product categories and spending a lot of time with Sabrina Bonesi, the brand’s design director for leather goods and shoes, in particular. He joked that Tisci and Bonesi now have “too many plans and too many ideas” to execute.He repeated his belief that Burberry has a huge opportunity in the accessories arena, and described the company as “very ambitious” in the category.Gobbetti said the brand’s new Belt bag — a soft, boxy number with a trench buckle detail — has gotten off to a promising start and is proving popular across multiple regions and among a diverse clientele. “It could be a pillar of the business, but it’s still early days and we have to see if it has stamina in the long term,” he said.The medium-sized version costs 1,590 pounds, a sweet spot in the handbag market, and a place where Burberry needed to be more competitive, according to Gobbetti.“When you take Dior, Vuitton, Chanel, Hermès, Céline, they’re playing in an even higher category, above 2,000 pounds, so already we’re not talking about that type of pricing. In that price bracket of 1,000 pounds to 2,000 pounds, we think there’s an opportunity for us,” he said.Earlier this week Burberry revealed it had purchased its longtime Italian leather goods manufacturer in a bid to exert more control over its offer and work closer with the artisans making its bags and leather accessories.Gobbetti said he's expecting Tisci to put a fresh stamp on the brand, while preserving its heritage.“I think we’re entering a new chapter: Riccardo is bringing in a different aesthetic, different experiences, but a vision that will sit very well within the evolution of Burberry, and within its values. I think it’s clear that the codes, the pillars, the brand’s classics really speak to him,” Gobbetti said.He also took pains to say that while Tisci had a talent for fusing streetwear with luxury, the Millennial customer is not the only one on Burberry’s radar. "As the British brand, we want to be relevant to customers of all ages," he said.Last week, Tisci curated a selection of heritage-inspired pieces from Burberry’s spring 2019 pre-collection — including a trench, car coat, Harrington jacket, kilt and cape — which he posted on Instagram Stories, hinting at his aesthetic vision for the company.Gobbetti said the company would continue to evolve the see-now-buy-now model, doing frequent drops throughout the year instead of putting its entire collection on sale immediately after the show — a strategy that former president and chief creative officer Christopher Bailey had pioneered.As reported in February, the brand offered up a capsule of runway looks that went on sale immediately. Gobbetti said it was a hit.“We went from a full offer of runway looks available right away to a capsule that was tight, very much a fashion capsule, and it performed extremely well. It was more edited, there were fewer options, but the depth and the sales per option went up in the triple digits,” he said.“Our go-to-market strategy is about more frequent, smaller deliveries, and it’s a strategy that will continue for now. If we deliver the full collection right away, then you come to the store, see the whole collection and then you don’t really have a reason to come again unless we can deliver something new. We just need to keep the customer’s attention — and keep them engaged with us,” he said.He declined to say whether Burberry would offer a see-now-buy-now runway capsule to go with Tisci’s first collection in September. “What we do know is that there will be a runway collection, and that collection will be delivered in February, as it normally would be,” Gobbetti said.Asked about the overnight store transformations that usually accompany the full see-now-buy-now runway offer, Gobbetti said they would be translated into special, specific installations to go with individual capsule collections during the year. He mentioned that Gosha Rubchinskiy’s second capsule for the brand will be delivered in July.Burberry has been working on its store portfolio. In addition to closing nonstrategic locations, it has been refreshing existing units. Gobbetti said Dubai would be among the first stores to get a refresh, while a new store concept should start rolling out in the second half of 2019.In the meantime, Gobbetti said, “you will see a refreshed look, new windows, new ways of doing things,” and the company would also be taking opportunities to move to new locations and upgrade, as in Knightsbridge, where it’s shifting to a new, larger location on Sloane Street.In fiscal 2017-18, Burberry’s operating profit rose 4 percent to 410 million pounds, while adjusted operating profit rose 2 percent to 467 million pounds. Burberry said the latter benefited from positive retail performance, 44 million pounds in incremental cost savings and improved beauty profitability due to reduced marketing and inventory charges.Net income climbed 2.4 percent to 294 million pounds. The figures were broadly in line with analysts’ expectations.Among the most dynamic markets were China and Hong Kong, the latter of which saw a surge of tourist spending in the fourth quarter, driving Burberry’s growth into the double digits.Mainland China delivered high-single-digit percentage growth, slowing to midsingle digits in the second half due to the annualization of strong prior-year trends, the company said. In the U.S., Burberry said improved traffic trends coupled with increased year-over-year conversion underpinned a return to growth in the second half.Europe was broadly stable year-over-year with a decline in the second half due to tough comparisons with the exceptional performance of the U.K. in the prior year after the fall in the pound. The U.K. delivered low-single-digit percentage growth, with growth in the first half offset by a decline in the second.Burberry said continental Europe declined marginally, with tourist spend softer in the second half, while the Middle East remained challenging, impacted by the macro-environment.Burberry also said it was on track to deliver cumulative cost savings of 100 million pounds and announced a share buyback of 150 million pounds.In a note following Wednesday’s results, Luca Solca of Exane BNP Paribas said the numbers were in line with expectations, while adjusted operating profit was slightly ahead."Burberry is at the beginning of a new chapter in its history. We like the progress the company has made in building a credible senior management team. We believe, though, that a relaunch will take time, due in part to the brand's low starting point, in terms of both distribution and desirability," Solca said.

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