Burberry designer’s buzzy ‘Kingdom’ powers demand for looks

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NEW BURBERRY Group Plc designer Riccardo Tisci is giving the British luxury-goods maker a boost before his creations are even available in stores.

Wholesale sales of his first collection, called “Kingdom,” have doubled from year-earlier levels in Europe, the Middle East, and Africa, Chief Financial Officer Julie Brown said Thursday after the company reported progress on a drive to boost its exclusivity and bolster its financial results. The shares rose as much as 2.4% in early London trading.

Tisci’s hiring earlier this year was a key part of Chief Executive Officer Marco Gobbetti’s turnaround plan. The new team wants to reposition the trenchcoat maker as a high-end luxury player to cash in on Chinese demand that’s lifting French conglomerate LVMH and Gucci owner Kering SA. Even before Tisci’s collection arrives in stores in February, the company has been pushing upmarket items like a £1,590 ($2,090) handbag that cinches closed with a belt, and it says others are on the way.

The new designer’s presence has already put Burberry in the spotlight as he modernized its logo, styled ad campaigns, and staged a hotly anticipated show during London Fashion Week. Tisci has teased customers with limited-edition “drops” — selling $600 sweatshirts in flash sales over Instagram and China’s WeChat. In its half-year financial report, the company cited “social-selling innovation” as a way to generate buzz.

As it seeks digital momentum, Burberry is paring its bricks-and-mortar retail exposure, especially in the US, where it’s dropped some middle-market department stores from its roster in a bid to boost its image and lift prices. The goal is to sell more bags and fashions through its own retail network.

The plan, initiated by former CEO and design chief Christopher Bailey and accelerated by the new management, is starting to show results. The company reported a 3% increase in comparable retail sales in the first half, in line with analyst estimates, and profit that came in above expectations.

That’s still a far cry from the double-digit gains Louis Vuitton owner LVMH and Kering have been chalking up in recent quarters. Burberry will price its handbags just below those of high-end luxury peers, Gobbetti said in an investor presentation.

At the presentation, CFO Brown sported items from Tisci’s September show, including a silk trench dress with trompe l’oeil painted buttons and a studded leather handbag.

The overhaul will take time, Gobbetti said, because a complete array of Tisci-designed products won’t be in stores until a year from now. Renovating more than 400 stores can’t be done overnight, either. As the company cuts back on its roster of outlets, it will continue to lose business from mid-range department stores, particularly in the US, which used to move heavy volumes of its checkered scarves and beige polos.

Meanwhile luxury companies are keeping a close eye on China, after reports of a crackdown on unauthorized imports hit their shares this autumn. Gobbetti said Burberry hasn’t seen any drop-off recently in that market.

The Tisci-led revamp is “a multi season project,” the CEO said. “We do believe there is space for us.” — Bloomberg