Burberry under fire for burning stock

LONDON • After designing, manufacturing, marketing and sending their creations down the runway, the last thing luxury companies want to do is destroy them.

Some Burberry Group shareholders are not too happy about the practice either.

The London-based trenchcoat maker physically destroyed finished products worth £28.6 million (S$51 million) this year, according to its latest annual report. This figure has steadily increased from £26.9 million last year and £18.8 million two years ago.

It is a practice now common across the industry to guard against counterfeiting. Retailers describe it as a measure to protect intellectual property and prevent products being stolen or sold at discounted prices. According to insiders quoted by The Times, the companies do not want their products to appear on the "grey markets" at slashed prices and later worn by the "wrong people".

Burberry is not alone.

It was reported last year that Swedish clothing retailer Hennes & Mauritz (H&M) burnt discarded clothing to help a power plant in Vasteras, north-west of Stockholm, replace coal for good. That means burning recycled wood and trash, including clothes H&M cannot sell. The Vasteras plant burnt about 15 tonnes of discarded clothes from H&M last year, compared with about 400,000 tonnes of trash.

Swiss watchmaker Richemont has also destroyed nearly €500 million (S$797 million) of its designer timepieces over the past two years to avoid them being sold at knockdown prices, the Guardian reported.

The disposal of unwanted goods shows that Burberry's turnaround effort under new chief executive Marco Gobbetti and designer Riccardo Tisci remains unfinished business.

Mr John Peace, the outgoing chairman, said destroying stock is "not something we do lightly".

More cosmetics needed to be destroyed this year as Burberry's beauty line was acquired by Coty, chief financial officer Julie Brown said.

Mr Gobbetti said Burberry has been donating leftover leather to Elvis & Kresse, a fashion firm that recycles cast-offs, since this year.

The burning of goods is also a matter of environmental concern to some investors, with one asking during Burberry's annual meeting why shareholders were not given the chance to buy the items.

Lawmaker Tim Farron, environment spokesman for the opposition Liberal Democrat party, said: "It is outrageous that Burberry thinks setting fire to its unsold stock is an acceptable solution."

Noting that recycling was "far better for the environment", he added: "As a leading British fashion brand, it should be leading the way in sustainable fashion."

BLOOMBERG, AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on July 21, 2018, with the headline 'Burberry under fire for burning stock'. Print Edition | Subscribe