1. Burberry Beauty Licensing
Pros of Buying Back Licensing

2. Previous License
• Acquired by Interparfums in 1993
(fragrance)
• Burberry accounts for roughly 50%
of Interparfums’ net sales
• Worked together to launch
“Burberry Body”
Distribution Model
• Includes sales to department
stores, multiband specialty
accounts, travel retail and
franchisees who operate 70 stores
Challenges
• “Fashion and beauty are different
industries”
• Difficult, costly and perhaps a
management distraction to bring beauty
in-house, especially during global
slowdown
• New departments to oversee: Product
development, logistics, manufacturing.
Facts & Figures
• Cost of ending perfume contract
£200M
• 2013 sales figures for Interparfums
included £130.3m worth of
Burberry sales
BackgroundBackground

3. Pros of Burberry Buying Back License
1. Increased revenues and profit margin
2. Control in terms of Marketing
3. Control in terms of Distribution
1. Beauty as growth platform for the future
1. Gaining of new competencies

4. 1. Increased Revenues
• Burberry optimistic it can beat Interparfums and speed up growth of perfume business, a
category that drives 9% of Burberry’s revenues (9% = £210B/ year).
It succeeded in its first year - As of 1st March 2013, Burberry grew global sales by 29.3% to
£213.8m compared to 165.4m the year before after the buy back of the beauty and fragrance
license.
• Potential to expand beyond perfumes into cosmetics, gaining a share of global fragrance and
cosmetics industry (potential to reach £106B in 2016)
• Beauty, in its first year of operation (2014), contributed wholesale revenue of ₤144.1m and
wholesale profit of ₤10.8m
• Beauty drove 7% of revenue, a 30% growth over the previous year (2012)
• Beauty contributed roughly 30% of total Wholesale growth in 2013
• Beauty grew to represent 9% of sales, growing double-digits each year since category integration

5. • Complete ownership of the business allows company to fully integrate beauty into international
marketing machine.
• Greater brand control for how product is positioned and marketing message.
• Connect each category as strongly as possible under one unified umbrella, thus leveraging to help
the brand sell other products. :
o Example: In 2014 to accompany the launch of My Burberry fragrance, the brand also
unveiled a trench-inspired makeup collection, developed in conjunction with makeup artist
Wendy Rowe.
o Example: When company launched Brit Rhythm, mens fragrance 09/2013, the accompanying
capsule collection of leather jackets & other fashion items sold out.
o Example: For launch of Mr. Burberry [April 2016], a grooming line will also be sold globally; it
will include such things as beard oil, moisturizer, deodorant, shower gel, and aftershave.
2. Control in terms of Marketing

6. 2. Control in terms of Marketing

7. • To be more directly involved with distribution plan.
o “We [are] working with distributors to elevate the look and also to elevate the existing
points of sales” - John Smith, COO, 09/2014
• Burberry is likely to be pulled off the shelves of the supermarkets and put in more upmarket
department stores.
• New POS:
o Burberry Beauty Box stores. Launched in December 2013 in Covent Garden, Burberry’s first
Beauty Box acts as a sort of testing ground for “everything from the shoulder up,” selling
makeup, fragrance and nail polish, as well as personalised gift boxes and certain accessories,
such as scarves (Services include the Burberry Beauty Box Bar (the gifting hub of the store),
monogramming for My Burberry, Beauty styling, Make-up Master Class, Fragrance discovery).
o Burberry is following up on its launch on Sephora.com in August 2015 with 40 bricks-and-mortar
Sephora stores across the globe, with a total of 100 expected by middle of 2016.
3. Control in terms of Distribution

8. 3. Control in terms of Distribution

9. 4. Beauty as growth platform for the future
• Burberry has ambitions to expand into cosmetics industry (by 2016, global fragrance
and cosmetics industry = £106b). Wants to capitalize on this and centralize operations
by making everything in-house.
• "It's about the halo effect beauty is bringing to the business" - CEO Angela
Ahrendts. The broad consumer exposure Burberry will get from expanding the
reach of entry-level products like perfume and lipsticks will bring more attention to
the brand as a whole.
• “One consistent brand expression, leveraged across all categories, will underpin
future growth in the beauty division and our existing core business. ”

10. 5. Gaining of New Competencies
• Will gain new competencies in supply chain, sourcing, and product development.

11. Results
2013 2014
478.3
2012
+3.2%
-1.2%
628.0
472.7
+32.9%
2015
648.1
+10.7%
Burberry Wholesales Revenue ( ’12-’15, £ mm)
Results
• Under the global declining luxury
environment, buying back of
beauty business enabled
Burberry gain 32.9% growth from
2013 to 2014
• From 2014 to 2015, despite the
slow down of China market and
unfavorable exchange rate,
Burberry succeed in growing at
3.2% continuously, thanks to the
fast growing beauty business
Source: Burberry Annual Report

12. Accessories
Mens
743
Beatu
y
2014
558
2,251
2,456
816
684
521
Womens
Childrens/Other
2015
893
Burberry Wholesales/Retail Revenue ( ’14-’15, £ mm)
Results
Growth Rate
9.4%
0.9%
22.1%
7.1%
8.6%
9.4%
Total
Results
• Among all segments, beauty
sector reached the fastest growth
speed for following reasons:
– The booming industry trend in
beauty sector
– The successful launch of
business initiatives, such as
My Burberry, the iconic
womens fragrance in 2014
– The co-marketing campaign
featured Burberry’s Heritage
trench coats, reinforcing the
brand image
Source: Burberry Annual Report

13. New Business Initiatives
My Burberry: women fragrance Iconic Burberry marketing: reinforce brand image