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Streetwear is ‘not finished’, says Burberry’s Riccardo Tisci

The British brand’s London Fashion Week show was light on luxury sportswear — but not because its creative director doesn’t believe trainers and tracksuits won’t sell

As one of the headlines show of London Fashion Week, many look to Burberry for clues as to where fashion is heading next. Designer Riccardo Tisci’s SS2019 debut for the brand ushered the return of Nineties beige and the knee-length skirt. Streetwear, too, has been one of the hallmarks of the “New Burberry”, and so the absence of heritage-check puffers and logo-stamped hoodies on Monday’s catwalk was conspicuous. Could it be that streetwear — the defining look of the 2010s — is finally on the way out?

Perhaps not yet. “We are doing very well with sportswear, with outerwear”, Tisci said in a round-table interview following the show. “I don’t agree that [streetwear] is finished,” he continued, observing that younger shoppers are simply wearing streetwear with more confidence and creativity today — mixing pieces with classic tailoring instead of outfitting themselves head-to-toe.

Tisci’s show, set to a live piano performance on a catwalk tiled with thousands of mirrors, was styled in much the same way. Whereas the designer’s first collections for Burberry segmented its offering for two wholly separate customers — luxe trench coats and sharp tonal suits for the seasoned City worker; studded and monogrammed down jackets and parkas for the street-hip millennial — recent shows have presented a cohesive vision.

They have fluidly mixed tailored trousers with trainers, and trenches with puffers — sometimes in a single garment. House signatures are diligently worked and reworked season after season.

Tisci plumbed the Burberry archives once again for AW2020, enlarging, miniaturising and layering — often piling — legacy checks and plaids on every manner of garment, from look-at-me suits and duffle coats to shirt dresses tied at the waist in the manner of Nineties grunge. The house’s signature quilted coat — a perennial favourite of American soccer moms — was reworked into a tailored riding jacket.

Trench coats were given new dimension with faux-shearling lapels and sleeves. Rugby stripes once again made an appearance, fashioned into polo tops and casual dresses. For evening, there were full-length black sequins, a black velvet suit with a trim waistcoat and snug polo-neck dresses with cut-outs edged in metal eyelets.

Compared to labels like Kering-owned Saint Laurent, which attributes 69 per cent of revenues to handbags and leather goods, Burberry is not a top player in accessories. This season’s offer — supersized woven totes in chocolate leather, large bowler and bucket bags coated in heritage check, a pointed-toe wedge heel tied back at the ankle — are unlikely to change that.

A more pressing challenge is China. Burberry’s sales, already battered by eight months of violent protests in Hong Kong, have taken a further beating as the coronavirus has spread throughout Asia and other parts of the world.

Share prices have fallen 16 per cent since mid-January on account of Burberry’s comparatively high exposure to the Chinese market — 40 per cent of its sales are made to Chinese nationals. In a note to investors on February 7, chief executive Marco Gobbetti acknowledged the virus was having a “material negative effect on luxury demand”, leading Burberry to close 24 of its 64 mainland China stores and cancel its April show in Shanghai.

I asked Tisci how closely he paid attention to sales. “Obviously a lot,” he said, adding that part of what attracted him to Burberry was that it presented an opportunity not only to be creative “but also where you could build a business”. Knowing what sells each week keeps him in tune to broader cultural shifts. “It makes you understand what women need, what men need, what the young generation needs.”

Seven years on there is little to show for Shinzo Abe’s ‘three arrows’ of fiscal stimulus

In 2013, Japan’s new prime minister Shinzo Abe delivered his first policy address, vowing to revive economic growth and end two decades of on-and-off deflation. He planned to achieve this with the “three arrows” of Abenomics: bold monetary easing, flexible fiscal policy and a reform strategy to revive private investment.

Seven years on, he has little to show for it. Following October’s rise in value added tax, Japan revealed on Monday that gross domestic product shrunk at an annualised rate of 6.3 per cent in the final quarter of 2019. With the economy suffering a fresh shock from the outbreak of coronavirus, most analysts think a technical recession — defined as two consecutive quarters of declining output — is probable.

The big questions are whether a technical recession could turn into a deeper downturn; whether there is anything the government and the Bank of Japan can do about it; and where this leaves Mr Abe’s ambition to revive Japan’s economy as the prime minister’s own time in office draws to a close.

Masamichi Adachi, UBS chief economist, said the latest growth numbers were “very weak, dismal, shockingly bad” and showed that the economy was struggling even before the virus struck. “Japan will definitely suffer from a plunge in inbound tourism and from weaker goods trade given the level of activity in China is so low,” he said.

But Mr Adachi said he expected that Japan could avoid a deeper downturn, so long as the virus abated by the end of March, allowing for a rebound in China’s economy. “Moreover, I would argue the [Abe] government will definitely step up with more fiscal stimulus,” he said.

Mr Abe has repeatedly launched spending packages when the economy weakens, but the timing is a problem this time because the government’s last stimulus has only just been approved in the Diet. Even if the prime minister acted straight away, it would probably take months to compile and pass another round.

“So far, none of last year’s stimulus has taken effect. The first thing to consider is accelerating that spending,” said Harumi Taguchi, principal economist at IHS Markit in Tokyo.

That leaves any possible action to the Bank of Japan, where governor Haruhiko Kuroda has already cut overnight interest rates to minus 0.1 per cent, and has been reluctant to do more for fear of negative side effects on the banking system.

In an interview with FujiSankei Business, published on Tuesday, Mr Kuroda said the virus was “the biggest source of uncertainty for Japan’s economy” but insisted there was little chance of growth in 2020 falling far below 2019. He also repeated the central bank’s boilerplate phrase: it would launch further easing “without hesitation” should it prove necessary.

There is little doubt, however, that the latest slump in output is another blow to Mr Abe and Mr Kuroda’s plans for Japan to finally escape the “lost decades” of stagnation and falling prices that followed the bursting of a stock market bubble in 1990.

The idea was for monetary and fiscal stimulus to revive demand and inflation while structural economic reforms allowed for a higher level of growth. Initially, it worked as intended: the Japanese yen weakened and growth picked up. The economy has generally been stronger during Mr Abe’s term than in previous decades.

But a 2014 rise in consumption tax from 5 per cent to 8 per cent drove the economy into recession, and after last year’s increase to 10 per cent there is a danger of a repeat.

To many in Japan, the tax rises were necessary and appropriate given the fiscal deficit and need to pay for its ageing population, but they have also cancelled out any fiscal stimulus measures and resulted in overall fiscal contraction under Mr Abe.

Paul Krugman, the economist, described the tax rises as examples of “destructive austerity policies”. Consumption was barely any higher in the final quarter of 2019 than it was in the same period of 2012, when Mr Abe won the election, and inflation has never come close to the BoJ’s 2 per cent target.

“I hesitate to say that the VAT hike was a mistake,” said Mr Adachi, arguing that Mr Abe had little alternative given Japan’s long-term fiscal trajectory. Ms Taguchi spoke for those in Japan who think greater deregulation was needed when she said “the big failure of Abenomics was on structural reform”.

Mr Abe is expected to step down in the next couple of years and will leave behind a difficult challenge for his successor. This will be whether to mount one last stimulus or accept Japan’s current growth performance is as good as it will get, and that Mr Abe’s dream of economic revival is out of reach.