since the UK voted to leave the EU
shares in Burberry the fashion retailer
and Global symbol of British style are
up
12% this is not down to patriotic
Britain's splashing out on trench
coats the main reason is that the weaker
pound will inflate burberry's results it
reports in Sterling but only a tenth of
its sales are in the UK and about half
of those sales are to tourists For Whom
the UK just became
cheaper the secondary reason is a
management shakeup Chris Bailey the
former design Chief promoted to chief
executive in
2014 will now be president which appears
to mean very important person who is no
longer
CEO a new CEO Marco gabetti will come
from lvmh the CFO Carol Fairweather will
also be replaced when these changes were
announced the shares Rose
6% but the shares remain down a third
from the highs of early last year growth
was in the double digits back then in
the first fiscal quarter just reported
same store sales were down 3% sales fell
in every region and wholesale Revenue
just over a quarter of sales is expected
to be down 10% in the first half as
customers tighten inventory and Order
cautiously it is tempting to conclude
that having a young designer running the
company was rash and that grown-up
supervision should get revenues up and
widen
margins this view does not stand up to
scrutiny the big problem is that 40% of
Burberry sales are from Chinese
customers who have pulled back hard
there are no obvious managerial
Solutions there in wholesale burberry's
key us customers are having a miserable
time even high-end department stores are
staggering Nordstrom shares for example
have been cut in half in just the last
year finally there is little to indicate
that Mr Bailey was falling short as a
manager the company's costs and margins
compare respectably with peers the plans
already in place emphasizing store
productivity over store growth and
simplification of the product line come
right out of the sensible retail
handbook that leaves two things for the
new team to do execute well and roll out
clothes that more people want to buy
only better sales growth will prove that
those two boxes have been ticked Rob
Armstrong
Lex