Once the envy of the UK fashion retailers, Burberry has had a turbulent few months. The 156-year-old purveyor of checked trenchcoats stunned the city when it issued a surprise profits warning last September, sending shares plummeting 19%.
Consumers are having second-thoughts about forking out a small fortune for a checked-lined coat and Burberry has been re-thinking its strategy. In a shuffle of the board, its chief financial officer has now been replaced and a new chief operating officer position has been created.
Ex-CEO of BBC Worldwide John Smith is stepping up to the new position of COO to lead the company’s digital growth and overseas expansion.
Smith, who has been a non-executive director on Burberry’s board for three years, will focus on driving the company’s presence in ‘the mobile digital age,’ Burberry said, as well as looking to ‘save costs and reallocate resources’.
Angela Ahrendts, Burberry’s CEO since 2006, has been leading a digital push, encouraging visitors to view videos and slideshows on the website and watch catwalks live on YouTube.
In the last year, Burberry has struggled with weaker sales and the company warned that full-year profits would only rise modestly on the previous year, from £376m in 2011 to around £400m in 2012.
Having grown rapidly in emerging markets such as China, sales have cooled somewhat as the economies of key luxury goods markets show signs of slowing. Recently the Chinese government has also clamped down on excess, encouraging people to practice thrift and shun extravagance and waste.
In his seven years as boss of the Beeb’s commercial arm, Smith quadrupled profits by growing international sales and pushing branding. There was potential for Worldwide's big names - Dancing with the Stars, Doctor Who and Top Gear – to have any number of global products spun off them he said, from DVDs, websites, to live shows, mobile applications - even cinema films. Who knows, perhaps Doctor Who will start wearing a Burberry cap in the next series?
In an interview with MT in October 2011, Smith said he admired the way Burberry handled its brand. Burberry’s chairman, Sir John Peace, described Smith's approach as analytical, but that ‘he gets branding and people.’ Can he revamp Burberry’s?