Burberry'S New Strategy Worries Investors

According to the world clothing shoes and hats net,

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The new strategy of Group PLC (BRBY.L) Boboli's new chief executive Marco Gobbetti is coming to a conclusion, focusing on the new strategy of high-end market positioning, as the market expects, and investors worry that this will make the company lose profits.

In Thursday's strategy update, Burberry Group PLC Boboli group listed the group's 161 glorious history and the IPO milestone in 2002. Then the conversation turned to show that the luxury industry has changed and consumers need innovation.

As a British Royal brand, the pformation focuses on product innovation and customer experience, including more high-end products.

Products, and specifically to investors, the group hopes to have a high single digit income growth, while operating profit margins have been raised.

The British group expects revenue and operating margins to remain stable (fixed exchange rate) in fiscal 2019 and fiscal year 2020, and 100 million and 120 million pounds in the two fiscal year, respectively. It is expected to pick up two data growth in the 2021 fiscal year.

As part of the pformation plan, Burberry Group PLC Boboli group will cut sales of non luxuries, first in the US market, followed by the EMEIA market.

The new restructuring plan will cost 110 million pounds, and Julie Brown, the group's chief financial officer, revealed new data on Thursday, which is nearly two times the cost of restructuring 60 million.

In the first half of the year, the profits of Burberry Group PLC Boboli group increased again, but the new strategy led to the biggest decline in its stock price in 5 years, and it has plunged more than 14%.

Tang Xiaotang, analyst at No Agency, said the market was overreacting.

He said that the strategy of Marco Gobbetti was expected. The company's release of the new strategy was orderly, and the cost of restructuring was also in line with expectations.

Tang Xiaotang believes that the measures to restructure the luxury sector and weaken the channel of us department stores are already rolling and can not be resisted. The enterprises currently doing it also prove that this measure is effective in both sales and profit margins. It is more important to ensure that the exclusiveness of the brand is not infringed. He said he did not worry that the British brand would encounter Waterloo like Mulberry Group PLC (MUL.L) Mai Baorui, who wanted to be "the British Hermes" and "the scale, market position and awareness of Burberry are stronger".

RBC Rogerio Fujimori, an analyst with Canadian capital, said investors should give British companies more time and patience.

But Bank of America Merrill Lynch Ashley Bank of America, Merrill Lynch, analysts believe that the premium of the British brand has been greatly reduced, and too optimistic about the pformation.

Morgan Stanley Elena analyst Mariani Elena said that the pformation strategy will reduce the UK group's 2019 and 2020 fiscal year earnings forecast 15%, the group's restructuring fee will reach 150 million pounds, while Burberry Group PLC Boboli group said in its strategy update statement that the medium term capital expenditure will reach 1.90-2.10 billion, while the 2019-2020 fiscal year is 1.50-1.60 billion.

The replacement of last week's announcement of Christopher Bailey, the chief creative officer, is another hot topic for the financial conference, but Marco Gobbetti says it will take time.

Chinese market promotes further improvement in Burberry's first quarter sales

Burberry Group PLC Bo Bailey also released a central newspaper which was largely ignored by investors on Thursday. As of the end of the first half of September, the British group achieved a profit of 185 million pounds, reclaiming growth, which rose 28% over the same period of 144 million in the 2017 fiscal year, higher than the market forecast of 167 million pounds, the fixed exchange rate rose 17%, the operating profit margin was 14.6%, and rose by 210 basis points per year.

Marco Gobbetti said the Asia Pacific market, which is driven by China in the first half of the year, is especially strong, and Chinese consumers admire the windbreaker and leather products of the company.

In the first half of the fiscal year, the British group gained 1 billion 263 million pounds, an increase of 9% over the same period last year, with a fixed exchange rate of 4%, a 10% increase in gross profit to 874 million pounds during the period, and a gross margin of 60 basis points to 69.2% in gross profit margin in the year of 9%.

The retail business continued to improve, with an annual increase of 10%, from 859 million to 9.44 pounds, a fixed exchange rate increase of 5% and a 4% increase in same store sales, of which 5% in the two quarter accelerated slightly compared with 4% in the first quarter.

The Asia Pacific market benefited from double-digit sales growth in mainland China, and the median sales growth in the same store in the first half of this year was 90% in retail sales. It is worth noting that the Hongkong market has resumed growth in the two quarter. The EMEIA market also has a median digit growth rate, while the UK market has seen double-digit growth, but with the strategy of stabilizing the pound and raising prices, the Asian market has slowed down in the two quarter. The Middle East situation has weakened the regional market; the Americas market is constrained by the dual consumption of both local consumers and tourists, and the income has declined, and the income in the two quarter has improved.

Burberry Group PLC Boboli said Tropical Gabardine and Car Coat drive clothing business growth, while handbags and small leather accessories are the driving force for accessories business growth.

Julie Brown said that 30% of the wholesale market in the US market is still weak, and department stores continue to weaken brand sales in order to compete for customers regardless of the brand discount strategy.

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