LONDON — Daniel Lee started work on Monday, and his first collection won’t appear until early next year, but it appears that investors already like his style.
In the five days since Lee’s appointment was revealed on Sept. 28, Burberry’s share price has risen by nearly 10 percent despite market turmoil, a drop in the FTSE 100, and an overall decline in European fashion and luxury stocks.
On Monday, Burberry shares closed up a modest 0.6 percent at 18.19 pounds. But that increase was part of an upward trajectory that began the moment Lee was announced as the brand’s chief creative officer. He succeeded Riccardo Tisci, who left the company last week.
Asked about Burberry’s share surge, Flavio Cereda of Jefferies said it could be due to “the perception of ‘all change’ away from a team that had not really delivered to expectations. I think the challenges are still significant here, especially as momentum for all [luxury] is slowing, but Burberry is always a little different. So the Daniel Lee news helped a lot.”
He’s British, just like Burberry, and he’s also managed the creative end of a large and high-profile European heritage brand. He was at Bottega for a little more than three years before the unexplained split from the Italian brand.
Many industry observers are expecting Lee, who’ll be based at Burberry’s Horseferry House headquarters in London, to pull a page out of his Bottega handbook and spin the British brand’s heritage check and trench into a collection of bestselling leather accessories for a new generation.
Financial analysts had a similar reaction.
On Friday, Cereda wrote that Lee’s appointment “should mean a refreshed leather goods offer, and a chance to grow Burberry brand heat. However, we do think the brand has significant challenges in terms of selling space, price points and outlets.”
Cereda added there is “scope for an overhaul of the leather goods business with a more exciting and higher price point offer, replicating Lee’s success with Bottega’s heritage product.”
As reported, Burberry still lags peers such as Gucci, Dior and Louis Vuitton in terms of leather accessories sales, and pricing. Although accessories is a fast-growing business at Burberry, it’s a relatively small one and prices remain lower than the brand’s peers on the European continent.
Last year, more than 50 percent of Burberry’s revenue came from menswear and womenswear combined, with accessories generating 37 percent.
Last week, Bernstein’s Luca Solca described handbags and shoes as “the two potentially most promising developments for Burberry. So far, the British brand has struggled to make its mark in these categories and create high-profile iconic products. Daniel could open this opportunity.”
At Bottega, Lee’s top-selling accessories included the Pouch bag, the Cassette bag and the Lido sandals. He was the designer who unleashed a craze for puffy, tactile, social media-friendy leather pieces. His designs spawned endless knockoffs up and down the high street, and his influence on fellow designers, and on consumer tastes, was clear.
Lee, who reports to Burberry’s chief executive officer Jonathan Akeroyd, won’t show his first collection until February 2023 at London Fashion Week, but the anticipation could potentially keep the shares buoyant until then.
Other factors, too, could bolster Burberry shares despite the current market volatility in Europe and the U.S.
On Monday, Bernstein published its observations following a series of fireside chats with luxury executives. The brokerage said demand in the sector remains “solid” and that any slowdown is happening at lower price points.
“The high-end is resilient,” wrote Bernstein. “Customers today buy more iconic items that hold their value over time.”
The markets could be thinking that it’s Lee who holds the key to Burberry’s future, lucrative, icons.