Burberry Group PLC, which has been in the crosshairs for burning tens of millions of dollars of its products, is far from the only firm to destroy unsold goods to maintain the exclusivity and luxury mystique of their brands.
In its annual report the British fashion firm acknowledged that it had burned unsold clothes, accessories and perfume worth ￡28.6 million (US$37 million).
More than one-third of the products destroyed were perfumes, which the company said was due to the rupture of its license with US fragrances manufacturer Coty Inc.
Since Thursday, when that piece of information buried in its 200-page report came to light, Burberry has come under scrutiny on social and news media for the practice.
However, industry experts say Burberry is far from alone.
“It is a widespread practice in the fashion industry, it’s commonplace,” said Arnaud Cadart, a portfolio manager at Flornoy & Associates who has previously followed the luxury industry as an analyst.
He said very few luxury brands hold sales to get rid of stock and instead destroy unsold products. Fashion items with short cycles increases the amount of leftover stock and items destroyed.
“Once you do some private sales to employees and journalists, it’s dumping,” he said.
Burberry on Thursday said it had measures in place to minimize its amount of excess stock, that it takes its environmental obligations seriously and harnesses the energy from burning the items.
“On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste,” the firm said.
The destruction of goods is reflected in financial accounts, but in a manner “difficult to comprehend, often under an entry ‘impairment of inventories,’” Cadart said.
French luxury giant LVMH Moet Hennessy Louis Vuitton SE said in its latest annual report that “provisions for impairment of inventories are ... generally required because of product obsolescence [end of season or collection or expiration date approaching] or lack of sales prospects.”
Hermes International SCA’s annual report also spoke of product “obsolescence,” notably finished seasons or collections.
“Yes, there is a moral, ethical question as well as protecting the environment, but from a legal point of view, the brands are destroying genuine products which they own, products that are at the end of their life or the season, and they can do what what they want” with them,” said Boriana Guimberteau, a specialist on intellectual property law with law firm FTPA.
Guimberteau said a tenet of maintaining brand image is that exclusive products should be sold in exclusive distribution networks and that markets should not be flooded with end-of-season products.
JITTERS: Nexperia has a 20 percent market share for chips powering simpler features such as window controls, and changing supply chains could take years European carmakers are looking into ways to scratch components made with parts from China, spooked by deepening geopolitical spats playing out through chipmaker Nexperia BV and Beijing’s export controls on rare earths. To protect operations from trade ructions, several automakers are pushing major suppliers to find permanent alternatives to Chinese semiconductors, people familiar with the matter said. The industry is considering broader changes to its supply chain to adapt to shifting geopolitics, Europe’s main suppliers lobby CLEPA head Matthias Zink said. “We had some indications already — questions like: ‘How can you supply me without this dependency on China?’” Zink, who also
At least US$50 million for the freedom of an Emirati sheikh: That is the king’s ransom paid two weeks ago to militants linked to al-Qaeda who are pushing to topple the Malian government and impose Islamic law. Alongside a crippling fuel blockade, the Group for the Support of Islam and Muslims (JNIM) has made kidnapping wealthy foreigners for a ransom a pillar of its strategy of “economic jihad.” Its goal: Oust the junta, which has struggled to contain Mali’s decade-long insurgency since taking power following back-to-back coups in 2020 and 2021, by scaring away investors and paralyzing the west African country’s economy.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) received about NT$147 billion (US$4.71 billion) in subsidies from the US, Japanese, German and Chinese governments over the past two years for its global expansion. Financial data compiled by the world’s largest contract chipmaker showed the company secured NT$4.77 billion in subsidies from the governments in the third quarter, bringing the total for the first three quarters of the year to about NT$71.9 billion. Along with the NT$75.16 billion in financial aid TSMC received last year, the chipmaker obtained NT$147 billion in subsidies in almost two years, the data showed. The subsidies received by its subsidiaries —
BUST FEARS: While a KMT legislator asked if an AI bubble could affect Taiwan, the DGBAS minister said the sector appears on track to continue growing The local property market has cooled down moderately following a series of credit control measures designed to contain speculation, the central bank said yesterday, while remaining tight-lipped about potential rule relaxations. Lawmakers in a meeting of the legislature’s Finance Committee voiced concerns to central bank officials that the credit control measures have adversely affected the government’s tax income and small and medium-sized property developers, with limited positive effects. Housing prices have been climbing since 2016, even when the central bank imposed its first set of control measures in 2020, Chinese Nationalist Party (KMT) Legislator Lo Ting-wei (羅廷瑋) said. “Since the second half of
RSS