Conflict in the Middle East is threatening the recovery of Burberry as it marks its 170th anniversary with the launch of a new ad campaign focused on its iconic trench coats.
The war could hamper boss Joshua Schulman’s attempts to revive the brand’s fortunes with a focus on ‘Britishness’, which he has called a ‘global language’ and credited with driving the revival of the firm.
It will be a test of what he calls the ‘global resonance’ of Burberry’s trench coat, to be modelled by stars of sport and screen like Jack Draper, Jonathan Bailey, Kate Moss, and Kristin Scott Thomas.
Burberry shares fell almost 6 per cent last week after hostilities erupted in the Middle East, a key market for luxury brands targeting wealthy shoppers in the Gulf. The Stoxx Europe Luxury 10 Index, which tracks the Continent’s biggest high-end fashion brands such as LVMH and Cartier-owner Richemont, fell 8 per cent.
War footing: Burberry’s very British trench coat takes centre stage in its new ad campaign
Before the conflict, the region had been a bright spot for the struggling sector as brands grappled with a slump in confidence in the Far East and troubles caused by Trump’s trade tariffs.
Luca Solca, an analyst at broker Bernstein, backed Burberry’s Britishness line but was apprehensive about the outlook for the sector. He said: ‘If people don’t go back to normal, and we have more issues sourcing oil and gas from the Gulf, then the probability of a recession globally could be increasing. That would definitely dampen discretionary sectors like luxury.’
Though Burberry has shops in high-profile centres such as the Dubai Mall and Mall of the Emirates, it is expected to be less hard-hit by a Middle East slowdown than its peers as the region accounts for just 3 per cent of sales, according to investment bank Morgan Stanley.
By contrast, LVMH, Richemont and Kering (whose brands include Gucci) rely on the region for as much as 9 per cent of their global sales.
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