Rushing to "Do a Burberry"
For nearly 270 years, Britain's Garrard has been the Royal Family's jeweler of choice. But these days, you can spot rap stars as well as blue bloods eyeing the merchandise at Garrard's new flagship store in London's tony Mayfair. The $352,199 black onyx and pavé diamond revolver dangling on a jeweled rope is more P. Diddy than Prince Charles. And that's the point. "We have a unique niche because we can combine hundreds of years of heritage and classic style with contemporary design," says Gianlucca Brozzetti, CEO of A&G UK Ltd., the privately held company that also owns Asprey, another venerable British house, known for its silver and leather goods.
Brozzetti has big plans for his British brands. A veteran of the luxury-goods industry who has held senior positions at Bulgari and LVMH Möet Hennessy, the 48-year-old Italian wants to boost A&G sales from $50 million a year to $400 million by 2010. To do that, he is spending $316 million over five years to reposition the two little-known marques, opening as many as 50 new stores worldwide and recruiting young designers such as Jade Jagger, Mick's daughter. Footing the bill are A&G's new owners and co-chairmen: Silas K.F. Chou and Lawrence S. Stoll, the duo that transformed Tommy Hilfiger into a global apparel powerhouse, along with Edgar Bronfman Jr., who bought a 40% stake in June for an undisclosed sum. Meanwhile, LVMH took a minority stake in A&G last year. "These brands are the oldest names in luxury goods, yet they're not well-known outside Britain," says Brozzetti. "We think there's major potential to change that."
The A&G chief wouldn't be the first to turn a small but respected British luxury name into an international highflier. In the fashion industry, it's called "doing a Burberry." That's a nod to the raincoat maker that transformed itself from tired to trendy by plastering its trademark plaid on everything from miniskirts to bikinis. An initial public offering of Burberry Group PLC shares in July raised $440 million. Operating profits for the six months ended Sept. 30 reached $87 million, a nearly 30% increase from a year earlier.
That rags-to-riches tale is inspiring a host of British companies to parlay hundreds of years of heritage into a hip new image. The hope is to carve out a bigger slice of the $80 billion-a-year global luxury-goods market. These are typically small, privately held enterprises. Many of them, including Asprey & Garrard, upscale stationer Smythson of Bond Street, and cashmere maker Pringle of Scotland also possess much-coveted royal warrants--proof of regal patronage. "There's a real passion for history and craftsmanship right now, and this gives British luxury brands a big edge," says Pringle CEO Kim Winser.
The 187-year-old Scottish cashmere house is now in the midst of a makeover. Since Winser, a 43-year-old Scott and a former director at Marks & Spencer (MAKSY ), took over two years ago she has installed a new design team and staged Pringle's first fashion show. The fall collection features a $462 twinset trimmed in faux fur and a $391 version in diamanté. Winser likes tradition with a twist: Check out the new argyle handbags. While the company doesn't disclose financials, sales are said to be up 80% since Winser arrived.
Smythson is also getting hip. Under creative director Samantha Cameron, it has been introducing limited-edition versions of its trademark datebooks in zany colors such as hot pink and purple, priced at $172. Management claims sales have since quadrupled.
Yet fashion is a fickle goddess, and she may not smile on all these Burberry wannabes. A worldwide economic slowdown and the fall-off in tourism are taking their toll on the luxury-goods business. "Consumers are more selective, and capital is more scarce," says Scilla Huang Sun, manager of Clariden Luxury Goods Equity Fund in Zurich.
What's more, a Pringle doesn't have the financial muscle of, say, a Prada. Because of their size, these conglomerates have an edge in marketing, manufacturing, and distribution that smaller players just can't match. "Doing a Burberry is extremely difficult," says Claire Kent, an analyst at Morgan Stanley in London. Some of these purveyors of haut luxe may end up as just a spray of jewels in a conglomerate's crown. Royal jewels, that is.
By Kerry Capell in London