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  • Since the UK voted to leave the EU, shares in Burberry, the fashion retailer and global symbol of British style, are up 12 percent.

  • This is not down to patriotic Britains, 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 management shake off.

  • Chris Bailey, former design chief, promoted to chief executive in 2014, will now be present,

  • which appears to mean very important person who is no longer CEO.

  • A new CEO, Marco Gobbetti, will come from LVMH. The CFO Carol Fairweather will also be replaced.

  • With these changes announced, the share grows 6 percent.

  • 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's sales were down 3 percent.

  • Sales fell in every region and whole sale revenue, just over a quarter of sales, is expected to be down 10 percent in the first half,

  • as customers take inventory and order cautiously.

  • It's tempting to conclude that having a young designer running the company was rash.

  • And that grown up supervision should get revenues up in wide and margins.

  • This view does not stand up to scrutiny.

  • The big problem is the 40 percent of Burberry sales are from Chinese customers who have pulled back hard.

  • There are no obvious managerial solution there

  • In whole sale, Burberry's key US customers are having a miserable time.

  • Even high end department stores are stegerate

  • Nordstrom share, 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 respectablely with peers.

  • The plan's already in place, emphasizing store productivity, over store growth, and simplification of the product line, come right out of the sensible retail handbook.

  • That leads 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

Since the UK voted to leave the EU, shares in Burberry, the fashion retailer and global symbol of British style, are up 12 percent.

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Burberry’s Brexit and boardroom bounce | Lex

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    Kiara posted on 2016/07/19
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