Burberry determined to ‘climb back up the luxury’ handbag market by acquiring its Italian leather goods supplier
As CEO Marco Gobbetti pushes to transform the brand, part of the strategy is to focus on producing high-end handbags and leather accessories
Burberry is to take over one of its leather goods suppliers in Italy as the British group seeks to boost its handbag business in a drive to take its brand more upmarket.
Burberry, which is seen as punching below its weight in handbags and leather accessories compared to its peers, says it will be taking a team of around 100 leather goods specialists in-house as part of the deal agreed with CF&P, one of its longstanding suppliers. It does not say how much it will pay for the deal.
Luxury goods firms tend to make the largest chunk of revenues from high-margin leather accessories, and many seek where possible to cut out the middleman, giving them more control over costs and turnaround times.
CF&P, which is based in Scandicci just outside Florence, focuses on developing prototypes and works with other brands. A small part of its business will remain independent following the deal with Burberry.
The acquisition comes as Burberry CEO Marco Gobbetti pushes to transform the brand known for its camel, red and black check designs into more of a top-end luxury player, in part by shaking up the product range.
“The challenge for Burberry in launching its new medium-term strategy to climb back up the luxury pyramid has been the fact that it is inherently weak in a core product area: leather goods,” analysts at Jefferies said in a note, adding that the Italian deal was a welcome move.
Burberry, which reports preliminary results on Wednesday, has also brought in a new designer, former Givenchy star Riccardo Tisci, and overhauled several layers of management.