There’s a lot you can disguise under a Burberry trench coat—a bootleg watch boutique, 58 weasels—but weak margins aren’t so easy to hide.
Burberry said yesterday it’s waging a campaign to cut discounts after reporting a better than expected 6% comparable sales decline in Q2.
Immediate sales could take a hit without markdowns, but execs said it’ll improve profitability.
Burberry’s also culling its inventory at third-party vendors to bring a sense of exclusivity back.
History repeating. Burberry has promised to raise its prices, and thereby gain brand value, since 2017—but earlier hikes weren’t high enough.
The price isn’t right
You'd be forgiven for wondering why Burberry would start intiatives that make it even harder to sell handbags during an already hard year. Boston Consulting Group projected luxury sales could fall 29% this year. But Burberry’s Vogue collage peers—Louis Vuitton, Chanel—quietly raised their prices throughout the spring.
The difference: Those brands also want to protect their margins, but unlike Burberry, they rarely (if ever) discounted to begin with.
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