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Investors look to Burberry's new boss for hints on fresh creative direction

City A.M. Monday, 6 November 2017 ()
Investors look to Burberry's new boss for hints on fresh creative directionThe spotlight is on Burberry's new chief executive to deliver a strategy for taking the brand forward amid an executive shake-up, when the firm's half-year results are reported on Thursday.

Last week, Christopher Bailey's departure from Burberry was announced, with the long-serving creative director and former chief executive leaving the firm by the end of next year. 

Marco Gobbetti took over as chief executive in July, and investors will be awaiting his strategy going forward with interest, at a time when the firm is also looking to bolster profits too. Burberry's pre-tax profits have fallen in each of its past three financial years, down five per cent to £394.8m for its most recent annual period.

*Read more*: Christopher Bailey is bowing out of Burberry

Analysts at UBS say the brand, renowned for its classic trench coats, has "been lacking 'buzz factor'", with product focus a key aim for the new chief executive as he looks to reinvigorate excitement for Burberry.

They have outlined five areas which could underpin significant long-term improvement for Burberry, including a renewed focus on commercial products such as outerwear.

Analysts also stress the importance of strengthening the luxury brand's "digital leadership", maintaining cost discipline going forward, and taking actions to improve US brand perceptions by cutting department store and outlet distribution. US retail like-for-like sales have been on the decline since the fourth quarter of 2016.

The flurry of new hires at the company is also a topic of interest for investors. Along with the new boss, Julie Brown was hired as chief financial officer, and there have been other recruits, including Sabrina Bonesi as design director of leather goods and shoes, Mark McClennon as chief information officer, and Judy Collinson as chief merchandising officer. 

UBS said the wave of new talent marked an exciting prospect for "driving change going forward". 

Any hints on a new creative director will be of interest for the market, after Bailey's plans to step down next year. UBS expects a new hire could be in place to design the spring/summer 2019 collection which shows in September next year. 

Analysts expect Gobbetti to remain committed to delivering the cost savings target of £100m, and believe the key areas of cost savings will be in employee costs, as well as more efficient use of digital marketing. 

*Read more*: Here's why Burberry shares are up this morning
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