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Saturday, July 4, 
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Burberry looks to Middle East for growth

Posted on November 20, 2008 at 10:30 AM
Filed under: Deal International | Growth Strategy | Joint Ventures and Alliances
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burberry.jpegU.K.-based Burberry Group plc is forming a joint venture to expand its presence in the Middle East. The luxury goods maker has formed Burberry Middle East with UAE-based Jashanmal Group, which has been a Burberry franchisee for a decade. The venture will sell and distribute high-end clothes in the region under a 15-year agreement.

Burberry same-store sales are up 40% so far this year in the Middle East, a bright spot in what is becoming an increasingly challenging market. While 2008 net profit was up 13% through September to $112 million, Burberry chief executive Angela Ahrendts warned of tougher conditions through the end of the year. Burberry shares on the London Stock Exchange fell 13% following her comments.

After showing resilience as the economy tanked, some luxury goods makers are beginning to take a hit. Italian jewelry maker Bulgari SpA posted a 44% drop in third-quarter profit, and Saks Inc. reported a $42.8 million loss for the quarter. Elsewhere, makers of high-end clothing and accessories from Louis Vuitton to Chanel SA are dropping prices as high-net-worth consumers begin scaling back purchases. - Suzanne Stevens





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