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Burberry buoyed by fast fashion and tourism figures

Shares in the luxury brand have been helped by the group's new sales strategy and better-than-expected tourism shopping figures
September 22, 2016

In fashion, it's all about waiting. Or it was. Traditionally, luxury brand connoisseurs view a collection six months ahead of time. In the past, this was done via extravagant catwalk shows, behind closed doors, and strictly by invitation only. But Burberry (BRBY) is shaking things up. The company sells into multiple geographies, across multiple climates and at various price points. This renders the usual autumn/winter and spring/summer collections a bit passé and not in keeping with Burberry's aim to stay at the forefront of the industry.

Over the course of London Fashion Week, Burberry shares rose 10 per cent. The reason, it appears, lies with the decision to sell new products directly from the runway. On 19 September, Burberry chose to livestream its latest fashion show and, as the models sashayed down in creative chief Christopher Bailey's latest designs, they were immediately available to purchase online. In short, the collection was well-received, and analysts suspect the new approach could lead to a near-term surge in sales.

Admittedly, there are other factors contributing to recent share price gains. UBS has highlighted data from Global Blue, a tourism shopping tax refund company headquartered in Switzerland, suggesting tourist spending was down just 5.2 per cent year on year in August - actually the slowest decline for six months - with the biggest improvements in the UK and Korea, two important markets for Burberry. That implies the recent referendum outcome has done little to deter tourist shoppers; in fact, the recent weakening in sterling may have only made exchange rates more appealing for foreign shoppers.

 

Growth in worldwide tourism spending