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UK fashion group seeks to overhaul brand as wider luxury market suffers downturn

Burberry has warned that trading will remain “challenging” after slowing demand for luxury goods hit its full-year profits.

The group best known for its trenchcoats said pre-tax profits in the year to the end of March tumbled to £383mn from £634mn a year earlier. Revenues dropped 4 per cent to £2.9bn.

Chief executive Jonathan Akeroyd, who has been in the job for two years, acknowledged that the group had underperformed its expectations but insisted progress had been made “refocusing its brand”.

Burberry remains confident in putting “Britishness” at the heart of the brand and trying to take it more upmarket, he added.

However, it is trying to do so in the face of a much tougher luxury market as the industry’s post-pandemic boom ends. The group warned in January that its profits would miss expectations.

Luca Solca, an analyst at Bernstein, said Burberry was “finding it tough to execute its brand development plan against a backdrop of moderating consumer demand”.

Its latest results underlined that Asian and US markets remained grim for the group. Overall like-for-like sales in the fourth quarter dropped 12 per cent year on year.

Shares in Burberry were down 1.5 per cent in early trading on Wednesday.

Akeroyd is targeting sales of £5bn in the long term by selling more higher-margin leather goods, shoes and accessories.

The retailer said on Wednesday that it expected currency headwinds to hit revenues by £30mn this year and adjusted operating profit by £20mn. Despite this, it proposed a full-year dividend of 61p.

Burberry’s struggles echo that of Gucci owner Kering, which warned on profits last month and is trying to overhaul its flagship brand during a downturn in luxury spending.

Deal with Delivery Hero gives investors in the sector something to chew over

Exacting diners will give a messy meal short shrift. Likewise, investors in food delivery apps ascribe little value to companies presenting a hodgepodge of assets. Making an effort to tidy things up can reveal a much more attractive proposition.

That, at least, is the lesson from Delivery Hero’s $950mn sale of its Taiwanese unit to Uber Eats this week. Coupled with Uber’s $300mn equity investment in Delivery Hero itself, it was enough to add $1.75bn, or about a quarter, to its market capitalisation.

In part, that reflects the fact that Delivery Hero got a good price. Uber is paying 0.6 times GMV, or the value of the merchandise delivered over the past 12 months. Delivery Hero itself trades on nearer 0.3 times. The $1.25bn of cash will also bring the company’s €3.9bn of net debt to more manageable levels.

Like weeknight cooks elated to find a forgotten jar of mushrooms in the larder, Delivery Hero’s investors may also be rediscovering overlooked ingredients. Valuing its three largest markets — South Korea, Saudi Arabia and the United Arab Emirates — on a multiple of 10 times 2025 adjusted ebitda yields an equity value of €5.6bn, according to Bernstein Research, or about 85 per cent of the group’s pre-deal market capitalisation. Its presence in a further 67 countries had clearly been mouldering at the back of the fridge.

Delivery Hero’s Taiwanese transaction is not entirely replicable. One reason Uber is paying up is that it will become a virtual monopolist in Taiwan’s food delivery sector. Antitrust clearance is not a given, and would be hard to imagine in other markets.

Yet the deal should still give investors in the sector something to chew over. They should already have been encouraged by an increasingly rational approach in what had been a freewheeling sector, with Deliveroo, Delivery Hero and Just Eat Takeaway all expected to turn cash flow positive this year. Consolidation could be the next leg of this trip.

There are a number of markets — especially in south-east Asia or Latin America — in which three or more food delivery companies are still slugging it out. Taking out the weaker players would improve the market for everyone.

There is also a case to be made for cross-border M&A to create stronger regional brands. While the food delivery business is a local one, scale does help spread technology, advertising and other fixed costs. And, if all else fails, exiting tiny or underperforming markets should help clean up their equity story.

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Patagonia, the ‘Proudly Unfashionable’ Company

Chief executive officer Ryan Gellert tackled the dilemma of how to be profitable and sustainable at the same time.

It’s a delicate balancing act — how to encourage customers not to buy things they don’t need and still run a healthy, profitable business. But over the past 51 years, Patagonia has managed to find a way.

Ever since Yvon Chouinard created the outdoors brand in 1973, a big part of its ethos has been to build a business that is functional, successful and also sustainable.

In a conversation with Archana Raum, Patagonia’s managing editor of responsible business, the company’s chief executive officer Ryan Gellert, said: “There’s an old adage, and that is, the most sustainable jacket is one that already exists. We’ve campaigned on this topic for a long time, we’ve really worked in partnership with our community and our customers to encourage them not to buy things that they don’t need.”

Those are the reasons Patagonia has embraced product resale, which it calls Worn Wear, and recycling, where it takes back pieces at the end of their life, Gellert said.

He stressed that “figuring out how to make product with a lower footprint, while critical, doesn’t do enough to negate just making too much product.”

Patagonia has long campaigned against overconsumption and Gellert said that will never change despite the world’s focus on businesses making more and more money. “I don’t think that there’s anything anti-capitalist about making high-quality product and encouraging people not to buy things that they don’t need. I certainly recognize it changes the model from the current one, which is a bit of a race to the bottom on how much can we sell, but I don’t think the growth in consumer goods that we’re navigating as a species is sustainable. This has to change.”

He said Patagonia customers “think deeply about these issues and in addition to making purchasing decisions that reflect their values, they generally are more active in protecting our home planet and engaging in civil society in a variety of ways.”

But as the CEO of a company, Gellert acknowledged that he wrestles with the question of where “profit sits next to purpose.” Over the past half-century, Patagonia has managed to “ride that knife edge,” he said, and never lose sight of its mission statement, which is: ‘We’re in business to save our home planet.’”

But Patagonia can’t do it alone, he said. “If we’re going to solve the climate and ecological crisis, it’s going to require government, civil society and the business sector all working in unison. I think the business sector has been missing in that conversation. We’re a business. We’re an ascendant business. We’re a profitable business. We’re a successful business. We make products and we provide services that people appreciate. And I think in doing that, we can be an example of a different form of business.”

Gellert said it didn’t take Chouinard long to realize that the products he was making for himself and other climbers who enjoyed the pristine outdoors would ultimately negatively impact the environment he loved so much. So he did an about-face to “clean climbing,” a philosophy that still drives Patagonia today.

Gellert said as a result of the company’s history, size and scale, Patagonia can now participate in discussions about how a consumer goods company can encourage people to think differently about consumption while also tackling the role business needs to play in the face of “the climate and ecological crisis” the world is facing.

He admitted that the hardest part is getting other business leaders to participate while “the most fertile ground is talking to customers, to students, to employees of other businesses, and bringing creative storytelling.”

He pointed to Patagonia’s newly released film, titled “Shitthropocene,” which addressed the dilemma facing the fashion community — an industry that accounts for up to 10 percent of carbon emissions and whose products overflow landfills around the world. He said the film not only educates people but also provides alternatives and “ways that people can engage in activism.”

Studies show that by 2030, the apparel industry could actually account for 50 percent of carbon emissions, but there is still time to address the problem if businesses step up and take responsibility.

“I don’t think that there is a place in our future for any model described as fast fashion, the notion of triggering people to buy things they don’t need, making things of low quality and then building an infrastructure that allows you to just toss things away,” he said. “That whole model is flawed. We’ve got to create an environment where that’s no longer acceptable.”

In addition, he said Patagonia has never followed the traditional fashion calendar and created seasonal product. Instead, it promotes quality products that can be repaired and can work in a wide range of environments. “We joke a lot that we’re proudly unfashionable,” he said. “But it’s creating timeless product. And that includes timeless colors. And that does kind of fly in the face of what the norm is in the industry.”

Gellert concluded his remarks with a piece of advice for other apparel industry brands: “You need to understand what your values are and commit deeply and permanently to making decisions across the breadth of your business — including in your supply chain — in relationship to all the impacted stakeholders: employees, customers, those that make your product and beyond. I think it’s understanding your footprint, being very consistent and addressing every challenge that you can. And understanding that it’s a journey really without an end.”

Founder Arnaud Frisch recounts his favorite memories of the Parisian club's pop-up, including the time Marion Cotillard cooked with Jean Imbert, and Isabelle Huppert shot a scene with Hong Sang-soo.

Silencio is celebrating the 10th anniversary of its Cannes pop-up. The venerable Paris club designed by David Lynch decamped to Cannes in 2011 (it took two years off during the pandemic), and has grown from its first intimate rooftop location to a cavernous club venue inside the Palais des Festivals.

Founder Arnaud Frisch first set up stakes at the Five Hotel on rue d’Antibes. The quiet, poolside restaurant perched above Cannes quickly became the go-to address, with the likes of Sean Penn and Steven Spielberg stopping by in its first year. Catherine Deneuve, Wes Anderson and David Cronenberg are some of the other big names that roll off of Frisch’s tongue.

“We had so many talents who showed up, for their film or just to enjoy,” he said. “The first location was very small.”

Silencio quickly moved to the more spacious private penthouse of Casino des Fleurs on rue des Belges the following year.

Early on it became famous for after parties, such as the “Clouds of Sils Maria” fete that brought the film’s stars Juliette Binoche, Kristen Stewart and Chloë Grace Moretz to the rooftop. It was a year before the “Heelgate” controversy, which changed the festival’s red carpet footwear policy, and Stewart famously changed out of the teetering high heels that accompanied her sparkly Chanel pantsuit on the red carpet into comfier running shoes for the film’s celebration.

The maze of rooms, with a restaurant at one end and staircases to a series of gardens, led to some intimate interactions among celebrity guests.

One night, Marion Cotillard popped by to step behind the stoves and help out friend and chef Jean Imbert, who was helming the kitchen.

“Jean was so young, and it was the first time we were working together,” said Frisch of the “Top Chef” winner, who is now head of the city’s Palme d’Or restaurant, as well as Monsieur Dior in Paris, among other high-profile venues. “He was still a young chef coming from TV and we did this first year, and there was a night Marion Cotillard came and cooked with him. She had come from the red carpet [but] she had changed out of her dress.

“They were really good friends and she was just helping for fun,” he said. But the actress took her role seriously with responses of “Yes, chef,” as required. Stewart, by then a Cannes regular, also hit the kitchen with Imbert that year.

Frisch and Imbert’s working relationship grew from there. They collaborated on the opening of Silencio’s Ibiza outpost in 2021.

The second Silencio location also ended up in the 2018 film “Claire’s Camera,” directed by Hong Sang-soo and starring Isabelle Huppert. Hong and Huppert had worked together on 2012’s “In Another Country” and after a casual meeting in Cannes, decided to shoot a film during the festival with the city as a backdrop. The off-the-cuff filmmaking style saw the team drop by Silencio one night for dinner — and to shoot a scene.

“Stars at Noon” director Claire Denis joined; it was she who introduced the pair at an art gallery in Paris years before. Those kinds of serendipitous moments made Silencio special, Frisch said.

That year was one for the history books: it also saw Palme d’Or winner Ruben Östlund pass through before he won his Palme.

Cast dinners were held earlier in the evening, with the “members only” club opening up at midnight to those granted a temporary Cannes card. Those coveted credentials went to specially selected festival-goers like actors, producers and distributors — meaning the movers and shakers of the film festival — as well as the film-adjacent spheres of fashion or music who were in town.

In 2019, Silencio moved to the Club Boulevard de la Republique, where it gave carte blanche to French disco-pop singer Corine. She created a Studio 54 vibe with mirrored interiors, colored neon lights, disco balls and lots of velvet, plus a menu that included candy apples.

After the pandemic cancellation in 2020 and a truncated edition in 2021, Frisch wanted to reopen the club, making it bigger and bolder.

“Since COVID[-19], we thought people wanted more to join together and to be in a different mood, so we took over the club inside the Palais and started programming great DJs during the whole festival, to make it the place to go after dinner,” he said. It’s quadrupled from its original capacity; the new location can host 800 guests.

That’s led to bigger parties, including French electronic duo Justice spinning for the after party of Quentin Dupieux’s “Smoking Causes Coughing” premiere in 2022. Diplo also hit the turntables that year, invited by Pigalle Paris designer Stéphane Ashpool.

Dup Lipa stopped by in 2023 on the arm of Romain Gavras for the afterparty of Elias Belkeddar’s “The King of Algiers.”

“We’ve had some really cool moments where it was really fitting between the music, the film and the people that were there,” Frisch said. The new space is connected to the Palais, which makes it easier for people to pop in as soon as a premiere receives its last ovation.

Even the busiest man in Cannes, festival general delegate Thierry Frémaux, made an appearance after the screening of Catherine Corsini’s “Homecoming” last year.

The original Silencio was designed by David Lynch. Its cultural ties with cinema are so strong that it has since opened its own theater in Paris in 2021, where it hosts special screenings and invite-only talks with directors such as David Fincher.

The team that handles programming at the Paris locations year-round turns its attention to Cannes each spring.

This year, the group is working with fashion show lighting designer Lancelot Rumney-Guggenheim and cocktail creator Rémy Savage, and has booked some powerhouse musical names: Skepta is on the star-studded lineup.

While the team traditionally plans ahead for the venue, it’s always a last-minute scheduling scramble as the festival finalizes its film premiere schedule just days before the opening gala. “We are in contact with agents and PRs for the films, but usually they are selected quite late. Then we have discussions at the last minute for the parties for the films,” Frisch said.

This year’s invites are still TBD, but he wouldn’t give away that info anyway. It’s not called Silencio for nothing.

But does he partake in the partying?

“Yeah, when it’s not in Silencio,” Frisch jokes. On any given night, he’s busy making sure things run smoothly for the many stars who attend, as well as trying to make other social calls up and down the Croisette. “I prefer to dance where it is not my club, but sometimes it happens.”