We don't need to tell you it's a tough time for luxury retail; the effects of the ever-fluctuating market are impacting even the flushest of brands, like Gucci and Yves Saint Laurent, and some houses — like Burberry — are being proactive about how they adapt to change. Last year, that's just what the U.K.'s quintessential luxury brand did, and while it may have laid the groundwork for future growth, it was an expensive investment that crippled its sales figures — for the time being, anyway.
In the 12 months ending March 31, Burberry's total revenue clocked in at £2.8 billion (about $3.6 billion), a 10.4 percent dip on a reported basis from the same period last year; its profits slid, too, by 7.3 percent to £286.8 million ($375.7 million). It's not all bad news, though: Following the announcement of Burberry's full-year reports, shares on the London Stock Exchange jumped 1.9 percent at £16.72 ($21.64). And surely, that's because investors get that in order to get better, it's going to get worse.
Burberry is one of luxury retail's most progressive change agents; the house prioritized digital sooner and more aggressively than many of its high-end colleagues, and in recent quarters, they've seen the record audience reach and engagement to legitimize its efforts.
But that hasn't come without its expenditures and expensive ones at that. In the last 12 months, Burberry named a new CEO, announced plans to relocate 300 jobs, moved to a "see now, buy now" presentation format, combined its womenswear and menswear shows and, perhaps most notably, inked a large-scale beauty licensing deal with Coty that will take effect this October. All of those developments, though preemptive, cost a pretty pretty — but no one's sweating it. Not even Chief Creative Officer Christopher Bailey, who said in a statement:
2017 was a year of transition for Burberry in a fast changing luxury market. The actions we have taken to lay the foundations for future growth are yielding early benefits and I remain confident that these will build over time.
Marco Gobbetti assumes the role of CEO from July. With his extensive experience in the sector, we will build on these foundations to elevate and strengthen the brand further and take Burberry to the next level as a global luxury retail and digital business. I am excited to work closely with him in this next chapter.
Rome wasn't built in a day, and of course, neither was Burberry. Here's hoping 2018 lives up to the expectations set by Bailey & Co. — otherwise, we'll be in some trouble.