Burberry Burns Stuff Worth $38 Million

07/23/2018
Melvyn Teillol-Foo

Burn Baby Burn

London Flagship Store ©Burberry

Last week, the press and social media made much of the “news” that luxury fashion brand Burberry had destroyed $38 million worth of goods in 2017. Their annual report revealed £28.6 million of stock was incinerated last year. That is the equivalent of more than 20,000 of Burbery signature trench coats.

Burberry Trench Coat Design

The news has left investors and consumers outraged but is of no surprise to those in the fashion industry. It is common practice to destroy unsold stock and even rolls of unused fabric because the availability at a cheaper price through discount stores discourages full-price sales and attempts at recycling leaves them vulnerable to being stolen and sold on the black market.

Burberry Trench Coat

Another reason for this practice may be financial incentive for brands exporting goods to America. U.S. Customs and Border Protection rules are: “If imported merchandise is unused and exported or destroyed under Customs supervision, 99 percent of the duties, taxes or fees paid on the merchandise by reason of importation may be recovered as drawback.”

Social Media Outrage

One “outraged investor” complained on social media that the unsold goods were not even offered to private investors before going to be incinerated. Others asked why the goods were not donated to the homeless or materials recycled.

Burberry said the brand has “careful processes in place to minimise the amount of excess stock produced” but when disposal is necessary, they do so in a “responsible manner using specialist incinerators that are able to harness the energy from the process.”

Burberry in Group ©Burberry

Burberry has disposed of around $118 million worth of goods over the last five years, ostensibly to maintain the brand value by keeping the designer label from being worn by the “wrong people” if they showed up on the “grey markets” for a discounted price. Burberry admitted to more products being destroyed last year than usual because its Beauty line was acquired by the American conglomerate Coty.

Burberry Beauty Line ©Burberry

 

All Animals Are Created Equal

Spring-Summer 2012 ©Burberry

At the beginning of the millennium, Burberry was in trouble because their signature check pattern was widely copied by cheap, imitation brands and putting off luxury consumers, who found their expensive outfits being associated with working class youth culture instead of a prestigious heritage fashion house.

At the height of overexposure of the Burberry check in 2004/5, Burberry turnover was £715.5 million. Burberry appointed Christopher Bailey as Creative Director and Angela Ahrendts as CEO in 2004 and 2006 respectively; they turned the brand around and 2017 revenue reached £2.73 billion.

Famous stars like Eddie Redmayne, Cara Delevingne and Sienna Miller modelled for Burberry.

Ms Ahrendts joined Apple in 2013 and Christopher Bailey departed in 2017, with Ricardo Tisci (Creative Director) and Marco Gobetti (CEO) taking over to present their first collection at London Fashion Week this September.

Spring 2018 impression ©Burberry

The reported practice by Burberry isn’t the only one in the fashion industry as both H&M and Richemont Group, which owns Cartier, Montblanc and IWC, have also been known to destroy excess product.

Last year, a Danish TV show “exposed” H&M for burning 12 tonnes of clothes since 2013. H&M defended itself by citing safety reasons: “The products to which the media are referring, have been tested in external laboratories. The test results show that one of the products is mould infested and the other product contains levels of lead that are too high. Those products have rightly been stopped in accordance with our safety routines.”

In May 2018, Richemont Group was criticised for “taking back” £437 million ($572 million) of watches for destruction in the last two years to avoid discount prices. There, some mechanical components and the gold material could be recycled and repurposed.

Some Pigs Are More Equal Than Others

The wastage at Burberry has been put down to burning old cosmetic stock to make way for their new beauty range. Setting aside the possible excess due to the sale of the Beauty line to Coty, Burberry executives are struggling to defend how they miscalculated production of clothes. While the value of destroyed stock is up from £26.9 million last year, it’s an even more significant increase from the 2016 figure of £18.8 million, showing that this is an ongoing poblem.

Spring 2018 Impression ©Burberry

Burberry switched to a ‘see now, buy now’ catwalk show format in 2016. This means that stock is produced before the fashion show and immediately available to consumers, to take advantage of the publicity coverage of their fashion week show.

Fashion Week

Burberry denied that switching to “see now, buy now” has had an impact on waste: “On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste. This is a core part of our Responsibility strategy to 2022 and we have forged partnerships and committed support to innovative organizations to help reach this goal.”

One such partnership is with Elvis & Kresse, an accessories brand that uses reclaimed materials. Co-founder Kresse Wesling said, “Late last year we launched an ambitious five-year partnership with the Burberry Foundation. The main aim of this is to scale our leather rescue project, starting with off-cuts from the production of Burberry leather goods. We are working tirelessly to expand our solutions and would love to welcome anyone to our workshop, to come and see what we are doing.”

Though, at the moment, the partnership only addresses waste at the production stage and not unsold goods. Additionally, Burberry is also working with the Ellen MacArthur Foundation on “circular economy initiatives”.

Thomas Burberry

Thomas Burberry

Thomas Burberry (27 August 1835 – 4 April 1926) was an English gentlemen’s outfitter, and the founder of international chain Burberry, one of Britain’s largest branded clothing businesses. He is also known as the inventor of gabardine weatherproof material.

T.Burberry & Sons, Outfitters

 

 

Author’s Biography: Melvyn Teillol-Foo (MTF)

Dr Melvyn Teillol-Foo is a contributor on AlphaLuxe web-zine.
He is also a moderator on PuristSPro.com horology discussion fora. He blends his scientific medical objectivity from the pharmaceutical industry with purist passion, in his musings about watches, travel, wine, food and other epicurean delights.
His travelogue ‘Lazing’ and feasting ‘Grazing’ series of articles have now passed into “mythic legend” on the original ‘ThePuristS.com’ website. Those were the halcyon days when he was “rich and famous” that he remembers with bittersweet fondness.

Dr Teillol-Foo is a quoted enthusiast on the watch industry, appearing in feature articles and interviews by Wall Street Journal, International Herald Tribune, Sunday Times (London), Chronos (Japan), Citizen Hedonist (France) and other publications. He has authored articles for magazines like International Watch (iW) – both U.S. & Chinese editions, ICON (Singapore), August Man (Singapore), Comfort (China) and The Watch (Hong Kong).