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Burberry PLC is a famous fashion brand leader in the world； its unique strategies， excellent leaderships and teamwork contribute to its different types of products spread all over the world. Especially， Burberry was regarded as an earliest innovation firm in the social networks and digital media. While this report will present an analysis of Burberry company activities in the past few years， mainly focus on the clothing industry in UK market to discuss， from financial performance and macro market environment with PEST analysis. Finally， the report makes recommendations for potential investors on whether worthy to invest in future.
Keywords marketing， luxury industry， information technology
1. Introduction
Burberry PLC is one of the most recognized leading global luxury reputation brands in the fashion industry， which is established by Draper’s apprentice Thomas Burberry in 1856 in Basingstoke， London. At the present， Burberry has nearly 500 stores， and almost 7，000 employees from approximate 50 different countries all over the world with 92 various nationalities. America， Europe and Asia Pacific constitute the major markets for Burberry in 2011. In the Asia Pacific， the main areas are China and Japan. Moreover， the “ Protect， Explore， Inspire” are regarded as chief values in Burberry business management.
Financial Ratio Analysis about Burberry
Profitability Ratios
Burberry has outstanding performance comparative its competitors and keeps positive on its profits during last five trading years （Bloomberg BusinessWeek， 2012b）. During the full year of 2011， Burberry had Sale revenue of ?1，501m， a 17.3% increase over the last year （Bloomberg BusinessWeek， 2012b）.The profitability ratios presented below （Figure 1）， it measures the financial performance of Burberry. Gross Profit Margin remains steady increase during the period years except in 2009 when Burberry reported an operating profit loss of ?16m. The Gross Margin was 67.26% for 2011， higher than the industry average （Bloomberg BusinessWeek， 2012b）.
The rapidly deterioration in 2009 were mainly result of underestimating the scale of the global economic slowdown had left Burberry with bloated inventories （Burberry Financial News， 2009）， causing the Cost of Sales in 2008/09 was ?535.7m-----an increase of 43% reported （Burberry Financial News， 2009）. Additionally， the major restructuring costs of ?54.9m， impairment charges and negative BME goodwill （?129.6m） were also made in this trading year （Burberry Financial News， 2009）. In despite of the profitability ratio in the period time （03/2008～03/2009） presents a downward trend because of some reasons analyzed above， both analysis indicate well that Burberry has its ability to manage its investments effectively.
Liquidity
Current Ratio， which determines the debt paying ability of Burberry to service short-term debt. The Acid Test Ratio also called Quick Ratio， which measure a company’s ability to pay the current liabilities immediately （Gowthorpe， 2005）. A good Current Ratio of 2：1 and Quick Ratio of 1：1 are recommended， however， this may has difference depend on different industries （Gowthorpe， 2005）. From the line graph about the liquidity of Burberry during the five trading years， the average Current Ratio was approximately 1.43 ----within the range in the luxury good industry （Bloomberg BusinessWeek， 2012c）. While， the Acid Test Ratio （Quick Ratio） was around 1.05， the range of industry is 0.24-1.5 （Bloomberg BusinessWeek， 2012c）. Therefore， the Liquidity Ratios of Burberry are positive. Furthermore， the Net Cash of Burberry had ?297.9m at the end of March in 2011 （FAME， 2011）. It also evidently proves that the Burberry has its enough ability to pay short-term debt and also has cash for further investments.
Share Price Performance
Every industry has been affected by global economic downturn， as the purchase behavior of customers has been shifted to be more economical （Mintel， 2011a）. The graph below （Figure 3） illustrates the interactive stock chart for Burberry Group PLC between September 2007 and April 2012 （Bloomberg Markets， 2012）. It clearly shows a drop in share price happened during the global financial crisis （2008-2009） and the share price closed at the lowest of 158.8p on 24th November 2008. However， with the improvement of the global economic situation， the share price grew steadily from 575.5p on 31th December 2009 to 1590.6p on 25th June 2011（Bloomberg Markets， 2012）， approximately 176.4% increase. Additionally， over the last few months， the share price has still performed very well even though there have fluctuations within a narrow range （Bloomberg Markets， 2012）.
Based on analysis of the financial performance of Burberry above， evidently reflects that the company has enough capability to operated investment management and outperformed over the past five trading years. Additionally， looking at the profitability ratios and liquidity ratios， they represent positive indications for Burberry. 3. PEST Analysis
Political
The policies of the government and its attitudes towards luxury fashion industry are significant to meet the company needs. As the statement of employers （e.g. JLR and Burberry） who want to nation’s talent provided by government rather than nation’s money （Reece， 2011）， this year， the government is aware of maintaining the superior quality of British art colleges， and does not allow immigration controls in order to attracting overseas students and staff without restriction to their ability （Times， 2012）. The change of policy on developing arts education will stimulate and cultivate good quality talents of design for the company.
Economic
Burberry is faced with the severe economic situation in where the domestic and partly overseas countries， which highlighting in the unemployment and disposable incomes might affect the marketing of the company. According to Allen （2012）， Portugal is experiencing depressed economy， as higher unemployment rates than Spain， the shrink of gross domestic goods and government debt crisis， such tough environment of economy strikes businesses. However， the trade surplus of China and its economic growth are rebalancing to the increased consumption （“Nothing chequered about，” 2012）， which means to be more opportunities of exporting goods to China. As for UK， Pittaway （2012） reports that it is facing risks of economy and uncertainties. Specifically， （Allen， 2012） official figures shows that Britain’s economy is weaker than at the end of the last year， reflecting on high inflation and increasing unemployment rates leads to the biggest falling of disposable incomes since 1977， and the pound is lower against US dollar and the euro. Thus， it is expected that the adjustment of marketing strategies is needed for considering the high unemployment and low disposable incomes in UK and Portugal.
Social
The changing of demographic structure and lifestyle might affect the target market of Burberry. The aging structure of UK population indicates that the large age group of over-55s provides an opportunity to exploit， and the increasing age group of 25-34s keeps the strong buying power as the stable disposable income （Mintel， 2011b）. It is believed that the increasing disposable incomes and purchasing power of working women make the growth of luxury products， said by Charles Stanley （Ahrendts & Green， 2011）. While the under-25s limit on purchasing power， especially the growing tuition fees of higher universities and unemployment rates in 2012， but they are still primary drivers of sales （Mintel， 2011b）. Technological / The Digital Dimension
As for technology investment， Burberry has involved in social networking sites （SNS） and launched high-technology official websites， in addition， using digital technologies to disseminate its brand fashion.Burberry launched the SNS is in order to enlarging its brand influence to new consumers and existing customers （Mintel， 2009）. The expectation has been achieved in the next year. Burberry gets one of the largest following by social media in UK， e.g. Facebook - one million fans， Twitter - 22，140 followers and YouTube - 1，682 subscribers （Mintel， 2010b）. Traditional ways of Burberry’s fashion propaganda have been upgraded to digital technologies， such as video stories， video clips and SNS， also the technologies of livestream， retail theatre and 3D have been adopted in fashion shows （Burberry， 2011）.
Furthermore， three type of official websites including one is Burberry World supporting e-commerce platform， one is Burberry Acoustic on the basis of multimedia cooperating with British artists， while ‘artofthetrench.com’ - a social media community provides online interaction spaces of sharing experiences of trench coats （Burberry， 2011）， which augments communication networks for customers.
Besides， Mintel （2011b） reports that the improved mobile technologies will affect consumers’ online buying behavior， as many fashion brands have launched Apps. Although Burberry makes a series of technological innovation on distribution， advertising and communication channel， in order to improve marketing approaches and customer experience， it is suggested to keep pace with the technology， mobile Apps are probably the next step for Burberry to consider further.
4. Conclusion and recommendations to Investors
Burberry represents a health position in the industry and gives highly confidence to investors.
As analysis above， Burberry has outperformed either in market aspects and financial aspects. Over the past few trading years， the strategy of building a strong and reputable brand image help Burberry survive during the global economic downturn.
Burberry upgrades information technologies using into social-media websites， and well operate social-media accounts. Up-to-date fashion information and advancing digital technologies improve customer’s shopping experience. Thus it can be seen that Burberry will attach importance to the development of SNS， which health brand image could be more strengthened and spread widely. The financial ratios also shows the situation and performance of Burberry are positive. The annual report shows that the total revenue for Burberry increases 25 percentages on revenue of ?1，501m in March 2011. 19 analysts predict it will continue to growth， the estimated total revenue in 2012 will be about ?1，9b （Bloomberg BusinessWeek， 2012）. Based on the above analysis， it is worthy to invest and it has enough potential to get high return.
Reference：
[1]Ahrendts， A.， & Green， L. （2011a， September 20）. Fashion is not just a pretty face， it is a key growth engine for the UK； Personal View. The Daily Telegraph （London）， p.4. Retrieved from the Lexis Library database.
[2]Allen， K. （2012， March 29）. The Guardian： Britain flirts with renewed recession after data shows economy weaker than feared： Weakest recovery cycle in a century， says analyst Fall in disposable incomes adds to gloomy outlook. The Financial Times， p. 2. Retrieved from the Newsbank database.
[3]Bloomberg BusinessWeek. （2012b）. BURBERRY GROUP PLC： Earnings Estimates. Retrieved from http：//investing.businessweek.com/research/stocks/earnings/earnings.asp？ticker=BRBY：LN
[4]Bloomberg BusinessWeek. （2012c）. BURBERRY GROUP PLC： Financial Ratios. Retrieved from
http：//investing.businessweek.com/research/stocks/financials/ratios.asp？ticker=BRBY：LN
[5]Bloomberg Markets. （2012）. BRBY：London Stock Chart - Burberry Group PLC. Retrieved from http：//www.bloomberg.com/quote/BRBY：LN/chart
[6]Burberry. （2011）. BURBERRY ANNULA REPORT 2010/2011. Retrieved from http：//201011.annualreport.burberry.com/
[7]Burberry Financial News. （2009， May 19）. 2008/09 Preliminary Results. Retrieved from http：//www.burberryplc.com/media_centre/press_releases
[8]Gowthorpe， C. （2005）. Business accounting & finance： for non-specialists （2nd ed.）. London： Thomson Learning.
FAME. （2011）. Burberry Group PLC Finacial & Ratios - FAME Report. Retrieved from https：//fame.bvdinfo.com/version-2012427/Report.serv？_CID=76&context=3VKS7TD5TV1NDMC&SeqNr=0
[9]Mintel. （2009）. Burberry to launch social network. Retrieved from http：//academic.mintel.com.eresources.shef.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=480031#hit1
[10]Mintel. （2010b）. Fashion brands dominate social networks. Retrieved from
http：//academic.mintel.com.eresources.shef.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=528180#hit1
[11]Mintel. （2011a）. Consumer Attitudes Towards Luxury Brands - Market Research Report.Oxygen. Retrieved from http：//academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=545468/display/id=600572#hit1
[12]Mintel. （2011b）. Fashion Online - UK - March 2011. Retrieved from http：//academic.mintel.com.eresources.shef.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=545448
[13]Nothing chequered about Burberry’s prospects. （2012， April 10）. The Express - the investment analyst. p. 50. Retrieved from the Lexis Library database.
[14]Pittaway， A. （2012， February 9）. The Birmingham Post： Despite economic climate there are development opportunities. The Financial Times ， p. 4. Retrieved from the Newsbank database.
[15]Reece， D. （2011 b， May 27）. Exporters may not need government money， but they will need talent； Comment. The Daily Telegraph （London）， p. 2. Retrieved from the Lexis Library database.
Keywords marketing， luxury industry， information technology
1. Introduction
Burberry PLC is one of the most recognized leading global luxury reputation brands in the fashion industry， which is established by Draper’s apprentice Thomas Burberry in 1856 in Basingstoke， London. At the present， Burberry has nearly 500 stores， and almost 7，000 employees from approximate 50 different countries all over the world with 92 various nationalities. America， Europe and Asia Pacific constitute the major markets for Burberry in 2011. In the Asia Pacific， the main areas are China and Japan. Moreover， the “ Protect， Explore， Inspire” are regarded as chief values in Burberry business management.
Financial Ratio Analysis about Burberry
Profitability Ratios
Burberry has outstanding performance comparative its competitors and keeps positive on its profits during last five trading years （Bloomberg BusinessWeek， 2012b）. During the full year of 2011， Burberry had Sale revenue of ?1，501m， a 17.3% increase over the last year （Bloomberg BusinessWeek， 2012b）.The profitability ratios presented below （Figure 1）， it measures the financial performance of Burberry. Gross Profit Margin remains steady increase during the period years except in 2009 when Burberry reported an operating profit loss of ?16m. The Gross Margin was 67.26% for 2011， higher than the industry average （Bloomberg BusinessWeek， 2012b）.
The rapidly deterioration in 2009 were mainly result of underestimating the scale of the global economic slowdown had left Burberry with bloated inventories （Burberry Financial News， 2009）， causing the Cost of Sales in 2008/09 was ?535.7m-----an increase of 43% reported （Burberry Financial News， 2009）. Additionally， the major restructuring costs of ?54.9m， impairment charges and negative BME goodwill （?129.6m） were also made in this trading year （Burberry Financial News， 2009）. In despite of the profitability ratio in the period time （03/2008～03/2009） presents a downward trend because of some reasons analyzed above， both analysis indicate well that Burberry has its ability to manage its investments effectively.
Liquidity
Current Ratio， which determines the debt paying ability of Burberry to service short-term debt. The Acid Test Ratio also called Quick Ratio， which measure a company’s ability to pay the current liabilities immediately （Gowthorpe， 2005）. A good Current Ratio of 2：1 and Quick Ratio of 1：1 are recommended， however， this may has difference depend on different industries （Gowthorpe， 2005）. From the line graph about the liquidity of Burberry during the five trading years， the average Current Ratio was approximately 1.43 ----within the range in the luxury good industry （Bloomberg BusinessWeek， 2012c）. While， the Acid Test Ratio （Quick Ratio） was around 1.05， the range of industry is 0.24-1.5 （Bloomberg BusinessWeek， 2012c）. Therefore， the Liquidity Ratios of Burberry are positive. Furthermore， the Net Cash of Burberry had ?297.9m at the end of March in 2011 （FAME， 2011）. It also evidently proves that the Burberry has its enough ability to pay short-term debt and also has cash for further investments.
Share Price Performance
Every industry has been affected by global economic downturn， as the purchase behavior of customers has been shifted to be more economical （Mintel， 2011a）. The graph below （Figure 3） illustrates the interactive stock chart for Burberry Group PLC between September 2007 and April 2012 （Bloomberg Markets， 2012）. It clearly shows a drop in share price happened during the global financial crisis （2008-2009） and the share price closed at the lowest of 158.8p on 24th November 2008. However， with the improvement of the global economic situation， the share price grew steadily from 575.5p on 31th December 2009 to 1590.6p on 25th June 2011（Bloomberg Markets， 2012）， approximately 176.4% increase. Additionally， over the last few months， the share price has still performed very well even though there have fluctuations within a narrow range （Bloomberg Markets， 2012）.
Based on analysis of the financial performance of Burberry above， evidently reflects that the company has enough capability to operated investment management and outperformed over the past five trading years. Additionally， looking at the profitability ratios and liquidity ratios， they represent positive indications for Burberry. 3. PEST Analysis
Political
The policies of the government and its attitudes towards luxury fashion industry are significant to meet the company needs. As the statement of employers （e.g. JLR and Burberry） who want to nation’s talent provided by government rather than nation’s money （Reece， 2011）， this year， the government is aware of maintaining the superior quality of British art colleges， and does not allow immigration controls in order to attracting overseas students and staff without restriction to their ability （Times， 2012）. The change of policy on developing arts education will stimulate and cultivate good quality talents of design for the company.
Economic
Burberry is faced with the severe economic situation in where the domestic and partly overseas countries， which highlighting in the unemployment and disposable incomes might affect the marketing of the company. According to Allen （2012）， Portugal is experiencing depressed economy， as higher unemployment rates than Spain， the shrink of gross domestic goods and government debt crisis， such tough environment of economy strikes businesses. However， the trade surplus of China and its economic growth are rebalancing to the increased consumption （“Nothing chequered about，” 2012）， which means to be more opportunities of exporting goods to China. As for UK， Pittaway （2012） reports that it is facing risks of economy and uncertainties. Specifically， （Allen， 2012） official figures shows that Britain’s economy is weaker than at the end of the last year， reflecting on high inflation and increasing unemployment rates leads to the biggest falling of disposable incomes since 1977， and the pound is lower against US dollar and the euro. Thus， it is expected that the adjustment of marketing strategies is needed for considering the high unemployment and low disposable incomes in UK and Portugal.
Social
The changing of demographic structure and lifestyle might affect the target market of Burberry. The aging structure of UK population indicates that the large age group of over-55s provides an opportunity to exploit， and the increasing age group of 25-34s keeps the strong buying power as the stable disposable income （Mintel， 2011b）. It is believed that the increasing disposable incomes and purchasing power of working women make the growth of luxury products， said by Charles Stanley （Ahrendts & Green， 2011）. While the under-25s limit on purchasing power， especially the growing tuition fees of higher universities and unemployment rates in 2012， but they are still primary drivers of sales （Mintel， 2011b）. Technological / The Digital Dimension
As for technology investment， Burberry has involved in social networking sites （SNS） and launched high-technology official websites， in addition， using digital technologies to disseminate its brand fashion.Burberry launched the SNS is in order to enlarging its brand influence to new consumers and existing customers （Mintel， 2009）. The expectation has been achieved in the next year. Burberry gets one of the largest following by social media in UK， e.g. Facebook - one million fans， Twitter - 22，140 followers and YouTube - 1，682 subscribers （Mintel， 2010b）. Traditional ways of Burberry’s fashion propaganda have been upgraded to digital technologies， such as video stories， video clips and SNS， also the technologies of livestream， retail theatre and 3D have been adopted in fashion shows （Burberry， 2011）.
Furthermore， three type of official websites including one is Burberry World supporting e-commerce platform， one is Burberry Acoustic on the basis of multimedia cooperating with British artists， while ‘artofthetrench.com’ - a social media community provides online interaction spaces of sharing experiences of trench coats （Burberry， 2011）， which augments communication networks for customers.
Besides， Mintel （2011b） reports that the improved mobile technologies will affect consumers’ online buying behavior， as many fashion brands have launched Apps. Although Burberry makes a series of technological innovation on distribution， advertising and communication channel， in order to improve marketing approaches and customer experience， it is suggested to keep pace with the technology， mobile Apps are probably the next step for Burberry to consider further.
4. Conclusion and recommendations to Investors
Burberry represents a health position in the industry and gives highly confidence to investors.
As analysis above， Burberry has outperformed either in market aspects and financial aspects. Over the past few trading years， the strategy of building a strong and reputable brand image help Burberry survive during the global economic downturn.
Burberry upgrades information technologies using into social-media websites， and well operate social-media accounts. Up-to-date fashion information and advancing digital technologies improve customer’s shopping experience. Thus it can be seen that Burberry will attach importance to the development of SNS， which health brand image could be more strengthened and spread widely. The financial ratios also shows the situation and performance of Burberry are positive. The annual report shows that the total revenue for Burberry increases 25 percentages on revenue of ?1，501m in March 2011. 19 analysts predict it will continue to growth， the estimated total revenue in 2012 will be about ?1，9b （Bloomberg BusinessWeek， 2012）. Based on the above analysis， it is worthy to invest and it has enough potential to get high return.
Reference：
[1]Ahrendts， A.， & Green， L. （2011a， September 20）. Fashion is not just a pretty face， it is a key growth engine for the UK； Personal View. The Daily Telegraph （London）， p.4. Retrieved from the Lexis Library database.
[2]Allen， K. （2012， March 29）. The Guardian： Britain flirts with renewed recession after data shows economy weaker than feared： Weakest recovery cycle in a century， says analyst Fall in disposable incomes adds to gloomy outlook. The Financial Times， p. 2. Retrieved from the Newsbank database.
[3]Bloomberg BusinessWeek. （2012b）. BURBERRY GROUP PLC： Earnings Estimates. Retrieved from http：//investing.businessweek.com/research/stocks/earnings/earnings.asp？ticker=BRBY：LN
[4]Bloomberg BusinessWeek. （2012c）. BURBERRY GROUP PLC： Financial Ratios. Retrieved from
http：//investing.businessweek.com/research/stocks/financials/ratios.asp？ticker=BRBY：LN
[5]Bloomberg Markets. （2012）. BRBY：London Stock Chart - Burberry Group PLC. Retrieved from http：//www.bloomberg.com/quote/BRBY：LN/chart
[6]Burberry. （2011）. BURBERRY ANNULA REPORT 2010/2011. Retrieved from http：//201011.annualreport.burberry.com/
[7]Burberry Financial News. （2009， May 19）. 2008/09 Preliminary Results. Retrieved from http：//www.burberryplc.com/media_centre/press_releases
[8]Gowthorpe， C. （2005）. Business accounting & finance： for non-specialists （2nd ed.）. London： Thomson Learning.
FAME. （2011）. Burberry Group PLC Finacial & Ratios - FAME Report. Retrieved from https：//fame.bvdinfo.com/version-2012427/Report.serv？_CID=76&context=3VKS7TD5TV1NDMC&SeqNr=0
[9]Mintel. （2009）. Burberry to launch social network. Retrieved from http：//academic.mintel.com.eresources.shef.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=480031#hit1
[10]Mintel. （2010b）. Fashion brands dominate social networks. Retrieved from
http：//academic.mintel.com.eresources.shef.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=528180#hit1
[11]Mintel. （2011a）. Consumer Attitudes Towards Luxury Brands - Market Research Report.Oxygen. Retrieved from http：//academic.mintel.com/sinatra/oxygen_academic/search_results/show&/display/id=545468/display/id=600572#hit1
[12]Mintel. （2011b）. Fashion Online - UK - March 2011. Retrieved from http：//academic.mintel.com.eresources.shef.ac.uk/sinatra/oxygen_academic/search_results/show&/display/id=545448
[13]Nothing chequered about Burberry’s prospects. （2012， April 10）. The Express - the investment analyst. p. 50. Retrieved from the Lexis Library database.
[14]Pittaway， A. （2012， February 9）. The Birmingham Post： Despite economic climate there are development opportunities. The Financial Times ， p. 4. Retrieved from the Newsbank database.
[15]Reece， D. （2011 b， May 27）. Exporters may not need government money， but they will need talent； Comment. The Daily Telegraph （London）， p. 2. Retrieved from the Lexis Library database.