UK: Burberry’s US expansion on the cards – analysts
UK luxury fashion retailer Burberry is poised to benefit from its US expansion, analysts told just-style on Thursday (14 June).
The 151-year-old firm, known for its upscale raincoats, handbags and accessories, has outlined an ambitious incursion into the "under-penetrated" US market.
This year, it plans to open 10 shops to take its store count to 50. In the long term, it hopes to operate 100 stores to satisfy American consumers' growing appetite for luxury apparel and accessories.
"This is a brand Americans like so they should do very well," says Richard Ratner, a senior analyst with the Seymour Pierce brokerage in London.
"Their wholesale business has done pretty well for years and their plan to open standalone stores should help boost their wholesale arm even further."
Verdict senior analyst Maureen Hinton agrees: "Burberry has good growth potential in the US. The Prosum range and Christopher Bailey have given it fashion authority yet it retains its appeal to a more conservative customer - especially men."
Burberry's new high-margin accessories range, which features watches and jewellery, should help diversify its revenue streams and this, coupled with fresh investments to improve its supply chain, should deliver higher like-for-like sales in the US, Hinton added.
But Ratner warned Burberry should be careful to choose the right store locations to lower its rental expenses in a market where store-fitting costs are typically high. Of course, they must also keep their clothes edgy and interesting.
"As a [fashion] retailer you are only as good as your next couple of ranges. The brand itself is not a means of success on its own. You must have the right merchandise."
Burberry currently operates 292 retail outlets around the world.
By Ivan Castano.
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