Five years ago, most customers at Burberry qualified for senior-citizen movie discounts; today most customers might actually be able to stay awake for the picture. Since revamping traditional Burberry, which was long known for its classic plaid scarves and trench coats, Rose Marie Bravo, its Bronx-born chief executive, has knocked 30 years off the average age of its customer.
That feat alone does not necessarily mean that Bravo, 51, will continue to pull exceptional profits from tartan bags and bikinis. Or that Burberry, which plans to offer 25 percent of its shares to the public this week, will not follow other fashion stocks and hit a plateau after its initial public offering on the London Stock Exchange starts trading on Friday. But when you preside over a 155-year-old company in a business as cruelly democratic as fashion, there is really only one way to go.
PHOTO: NY TIMES
"We had to broaden our image," Bravo said.
Her voice raw, she has just come through three weeks of scrutiny by investors in Europe. The offering, which was priced on Thursday at ?2.30 (US$3.59) a share, the low end of the expected range, values the entire company at ?1.15 billion (US$1.79 billion). That represents a fivefold increase in value since Bravo arrived at Burberry -- and a flattering endorsement of the outsider's perspective she brought to an aging British brand.
Indeed, while other initial public offerings -- including some high-profile fashion brands like Prada -- have been abandoned or postponed around the world in recent months, Burberry's offering is already oversubscribed.
Bravo will not go unrewarded for her efforts. As she flew last week from London to Glasgow, Scotland, and on to Frankfurt, Germany, and New York for a final round of presentations, British journalists and analysts alike were focusing on the US$15 million in compensation she will receive, calling it excessive and potentially troublesome in a chastened luxury market.
In a telephone interview from Glasgow, Bravo declined to discuss her compensation package, which includes a US$1.5 million base salary plus bonus and stock options. But David Tyler, the chief financial officer of Burberry's parent company, Great Universal Stores, said the compensation committee had conducted a thorough review of pay packages in the industry before arriving at the figure.
"We think she's worth every penny," Tyler said.
Bravo is not a novice at taking companies public. As president of Saks Fifth Avenue in the 1990s, she led its investor presentations, and to prepare the Burberry offering, she hired Matthew McElvoy, a former Goldman Sachs executive who worked on the Saks offering. But even as Burberry continues to forecast strong growth -- revenue for the 12 months that ended on March 31 rose 16 percent, to ?499.2 million (US$777 million), while net income was up 3.9 percent to ?56.5 million (US$88 million) -- questions loom:
Why take the company public now, especially in light of Prada's recent decision to postpone its offering for the third time in a year? Now that enthusiasm for Burberry's cheeky plaid hats and coats has cooled among fashionistas, what else does Bravo have up her sleeve?
Not convinced
"Burberry still has a lot to prove," said David Jeary, a retail analyst with Credit Suisse First Boston in London. "They had two relatively good seasons, but wholesale orders are flat at the moment."
Among the challenges that Bravo faces is to show that Burberry is a true luxury brand along the lines of Gucci. Burberry's margins lag those of other luxury companies, which tend to make most of their profits on leather goods and accessories. The bulk of Burberry's business is apparel, which commands lower profit margins and is subject to more frequent markdowns.
"It remains to be seen whether Burberry can consistently make the grade as a luxury brand or whether it will be seen as a quirky, updated British brand," Jeary said.
Bravo has many things going for her, not least a track record for solid management and consistency. "She's a brilliant merchant and a great leader of people," said Philip Miller, who hired Bravo when he was vice chairman of Saks in 1992 and she was president of I. Magnin in California. "She has a very good rapport with designers and the fashion market. She understands the whole world of luxury. And she works like a demon."
Those who know her describe her as a workaholic whose disarmingly friendly nature has helped her ease into British social and business circles. "She loves living there, and she's become the best friend of Prince Charles," the New York designer Adrienne Vittadini said in a clear bit of overstatement.
Burberry fields an annual polo match for the prince's charitable trust.
Work ethic
Nonetheless, her ultra-American personality has been a factor in Burberry's turnaround. A daughter of an Italian-American hairdresser from the Bronx who operated a salon on 181st Street, Bravo typically puts in 12-hour days in her London office. She laughs at the idea that an occasional invitation to Highgrove, Prince Charles' country house, signifies a high-powered social life.
"What social life?" Bravo, who is married to William Jackey, a retired furniture representative, said with a laugh. "I go out for pizza with Bill at 9:30 at night."
Bravo's drive has lifted Burberry from its reputation as a drab but profitable purveyor of men's raincoats and sensible English woolens. Hired in 1997 by Victor Barnett, the chairman of Burberry, Bravo followed the tough house-cleaning example set by Gucci a decade ago.
She swept out redundant licenses and refocused the brand's image. To make it more coherent, and create buzz among fashion editors, she hired Roberto Menichetti to design a line called Prorsum, and she had a design team perk up Burberry's iconic beige-and-red plaid with racy mini-kilts and other styles that tweaked, rather than muffled, its British heritage.
Ad campaigns with work by the photographer Mario Testino that featured the models Kate Moss and Stella Tennant hanging out with their friends helped put across the hipper image. "The concept is a British lifestyle, and we've stayed very committed to it for five years," Bravo said. "It's family, friends, dogs, wit. Everybody getting together, in sort of this zany British setting."
There have been growing pains. Menichetti left, and his replacement, Christopher Bailey, has earned promising but largely mixed reviews for his Prorsum collections. As Bravo acknowledged, that awkward-sounding label suggests something of a split personality. Is the new Burberry a cool pair of plaid pants favored by Japanese teenagers? Or is it one of Bailey's understated blazers in paisley velvet? Bravo says it is both, adding that the complete picture will become clearer when a new US flagship store opens on East 57th Street in Manhattan this fall.
In any case, Tyler of Great Universal said the decision to go public now had less to do with the vagaries of the stock markets and more to do with fulfilling a long-term strategic goal. "Burberry is now mature enough to be run as an independent business without any guidance from a parent," he said.
Of the ?282 million (US$439 million) that Burberry expects to raise from the offering, it will use ?25 million to buy out its South Korean distributors and ?10 million for expansion, including the opening of new stores in the US and Asia. It will use the rest of the money to pay debt.
Sightings of Burberry's plaid are still plentiful -- the teenage daughter of an American fashion editor was going around the couture shows in Paris this week in a mini-kilt, for example. But Bravo knows how fickle fashion can be. The plaid now appears on only 10 percent of Burberry's apparel, she said, and she wants it to be used more covertly -- hidden, say, under a collar.
David Wolf, an analyst with the Doneger Group, sees this as a smart direction for the brand. "Fashion people are confusing traditional Burberry with trendy Burberry, which had its moment," he said. "I think Rose Marie is after solid, classical luxury. Fashion with a capital F has overstayed its welcome."
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