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Burberry Looks Online for Ways to Gain Customers 1
By JULIA WERDIGIER
LONDON — Angela Ahrendts still remembers when she bought her first Burberry trench coat. She was 21 years old, had just finished her studies in Indiana and was looking for a smart but warm coat to wear for her first job at a small men’s wear firm in New York.
Those raincoats, a 95-year-old fashion icon, remain Burberry’s best-selling item, and Ms. Ahrendts — who now runs the company — is hoping to move the quintessentially British brand into the age of the Internet to attract a new generation of shoppers.
On Monday, Burberry introduced a social networking site, artofthetrench.com, to encourage people to share their own trench coat stories. It is the latest step by Ms. Ahrendts and her creative director, Christopher Bailey, to build on the brand’s British heritage and trademark plaid with a more modern twist.
“It’s our differentiator,” Ms. Ahrendts said. “It’s not so different from what competitors do. Maybe one was born from shoes and another from luggage; we come from a coat. It’s our job to keep that category hot and cool and relevant for all ages.”
The step reflects a broader move by luxury goods companies, which have generally failed to figure out how to sell their wares online. Indeed, many have shunned the Web, seeing it as mostly a place for bargain hunters to search for knock-offs or counterfeits.
As highly affluent, but aging, customers in developed countries cut back on their purchases of luxury goods, the Web represents the prospect for growth.
Salvatore Ferragamo announced plans for an online store in October, following its Italian rivals Prada and Bulgari to the Net. Fabergé, creator of the legendary Imperial Easter eggs, started selling its new jewelry collection almost exclusively on the Web in September.
Ms. Ahrendts, who is tall, charismatic and often dresses head to toe in Burberry, used to work at Donna Karan and is bringing an American touch to the company based in London.
Burberry has been on the upswing for much of the decade, but since taking over three years ago, Ms. Ahrendts, 49, has cut $82 million in costs, expanded in the United States and Asia, and opened separate children’s fashion stores.
She also added more shoes and handbags, including the $6,200 “Beaton” bag worn by Victoria Beckham, and took greater control of pricing by opening more Burberry stores.
As a result, Burberry has done better than most of its competitors in steering through the Great Recession. Sales rose 4.6 percent to £343 million, or $568 million, in the three months to the end of September, beating analyst expectations. The price of its shares has doubled during the past year.
For years, Burberry was seen as a limited brand, a potential takeover target for the likes of Coach, Richemont and LVMH Moët Hennessy Louis Vuitton. But the increase in its share price during the past year has acted as a good defense.
Today, Burberry faces twin challenges: to maintain momentum amid a difficult economic recovery, and to keep the expansion drive from diluting the brand.
“The biggest thing that keeps me up at night is how can we continue to evolve this organization in order to stay ahead of the curve,” Ms. Ahrendts said during an interview at the company headquarters last month. “My job is to always look two to three years ahead and look round the corner and see what’s coming.”
The recession split luxury goods makers into different camps. Those more reliant on sales from jewelry and watches, like Bulgari, were hit harder than those selling clothes and less expensive or less ostentatious items. At the same time, companies that depended more on department stores suffered most of all, largely because they had less control over pricing and inventories.
After a roughly 8 percent decline this year, the $226 billion global market for luxury goods is expected to grow again next year as younger consumers and working women replace retiring baby boomers as the dominant consumer group, according to consulting firm Bain & Company.
That’s one of the main reasons Burberry is now focusing on the Internet. Ms. Ahrendts said she gets a lot of inspiration from her three children, who spend time surfing the Web and buy most of their clothes online.
Ms. Ahrendts said she is proud that Burberry has more than 699,000 Facebook fans. The company, founded as a maker of outdoor wear in 1856 by the British draper’s apprentice, Thomas Burberry, is also attracting customers via Twitter and Youtube.
Burberry gets about two-thirds of its revenue from clothing. Ms. Ahrendts has sharply reduced Burberry’s reliance on department stores; this year, direct retail overtook wholesale as the company’s biggest sales channel. Burberry, which produces the trench coat in Britain, also benefited from a weaker pound that attracted euro-wielding tourists from mainland Europe.
But Burberry’s major dependence on tourists and the benefit it has derived lately from a favorable exchange rate worries some analysts.
To strengthen the brand, Ms. Ahrendts divided Burberry’s clothing lines more clearly. There’s Prorsum, which includes high-end couture and evening wear worn by celebrities like Gwyneth Paltrow and Liv Tyler. The classic Burberry London clothes are designed to be office and everyday wear, while Burberry Brit offers a more casual weekend look.
The separate children’s line was almost too successful for its own good: Burberry received so much demand this year that it ran into production and shipping problems.
Indeed, the trickiest balancing act is to manage further growth.
“They’ve got the balance sheet to expand when others in the industry can’t, which means they can really benefit once the market recovers,” said Katharine Wynne, an analyst at Investec in London. “But you have to make sure you keep that design heritage and retain that exclusivity.”
Its trench coat — originally designed for the British army in 1914 and later associated with Audrey Hepburn’s character in “Breakfast at Tiffany’s” and Humphrey Bogart’s in “Casablanca” — has come a long way since then.
Thanks to Mr. Bailey, the 38-year old British designer who also worked with Ms. Ahrendts at Donna Karan, there are now trench evening and mini dresses.
In Burberry’s new headquarters along the Thames, its heritage is still visible through the ultra-modern white-brown interior. Ms. Ahrendts recently revived a 108-year old company trademark of an equestrian knight carrying a flag with the words Prorsum — Latin for forward. The image now features prominently in the headquarters’ glass-walled entrance hall.
Inside, a photo of Emma Watson, the young British actress starring in the Harry Potter movies, modeling a $1,300 trench coat covers an entire wall. Next to it, a glass cube showcases a collection of the best-selling trench coat designs over the years.
Seeking to clearly separate Burberry’s different designs, the company is preparing to open its first stand-alone Burberry London and Burberry Brit stores this month, flanking the entrance to the company’s new Manhattan offices on Madison Avenue. It is also in talks with a licensing partner to add a make-up and beauty range next year, and is planning to offer more men’s accessories, such as bags and scarves.
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Burberry Looks Online for Ways to Gain Customers 1
By JULIA WERDIGIER
LONDON — Angela Ahrendts still remembers when she bought her first Burberry trench coat. She was 21 years old, had just finished her studies in Indiana and was looking for a smart but warm coat to wear for her first job at a small men’s wear firm in New York.
Those raincoats, a 95-year-old fashion icon, remain Burberry’s best-selling item, and Ms. Ahrendts — who now runs the company — is hoping to move the quintessentially British brand into the age of the Internet to attract a new generation of shoppers.
On Monday, Burberry introduced a social networking site, artofthetrench.com, to encourage people to share their own trench coat stories. It is the latest step by Ms. Ahrendts and her creative director, Christopher Bailey, to build on the brand’s British heritage and trademark plaid with a more modern twist.
“It’s our differentiator,” Ms. Ahrendts said. “It’s not so different from what competitors do. Maybe one was born from shoes and another from luggage; we come from a coat. It’s our job to keep that category hot and cool and relevant for all ages.”
The step reflects a broader move by luxury goods companies, which have generally failed to figure out how to sell their wares online. Indeed, many have shunned the Web, seeing it as mostly a place for bargain hunters to search for knock-offs or counterfeits.
As highly affluent, but aging, customers in developed countries cut back on their purchases of luxury goods, the Web represents the prospect for growth.
Salvatore Ferragamo announced plans for an online store in October, following its Italian rivals Prada and Bulgari to the Net. Fabergé, creator of the legendary Imperial Easter eggs, started selling its new jewelry collection almost exclusively on the Web in September.
Ms. Ahrendts, who is tall, charismatic and often dresses head to toe in Burberry, used to work at Donna Karan and is bringing an American touch to the company based in London.
Burberry has been on the upswing for much of the decade, but since taking over three years ago, Ms. Ahrendts, 49, has cut $82 million in costs, expanded in the United States and Asia, and opened separate children’s fashion stores.
She also added more shoes and handbags, including the $6,200 “Beaton” bag worn by Victoria Beckham, and took greater control of pricing by opening more Burberry stores.
As a result, Burberry has done better than most of its competitors in steering through the Great Recession. Sales rose 4.6 percent to £343 million, or $568 million, in the three months to the end of September, beating analyst expectations. The price of its shares has doubled during the past year.
For years, Burberry was seen as a limited brand, a potential takeover target for the likes of Coach, Richemont and LVMH Moët Hennessy Louis Vuitton. But the increase in its share price during the past year has acted as a good defense.
Today, Burberry faces twin challenges: to maintain momentum amid a difficult economic recovery, and to keep the expansion drive from diluting the brand.
“The biggest thing that keeps me up at night is how can we continue to evolve this organization in order to stay ahead of the curve,” Ms. Ahrendts said during an interview at the company headquarters last month. “My job is to always look two to three years ahead and look round the corner and see what’s coming.”
The recession split luxury goods makers into different camps. Those more reliant on sales from jewelry and watches, like Bulgari, were hit harder than those selling clothes and less expensive or less ostentatious items. At the same time, companies that depended more on department stores suffered most of all, largely because they had less control over pricing and inventories.
After a roughly 8 percent decline this year, the $226 billion global market for luxury goods is expected to grow again next year as younger consumers and working women replace retiring baby boomers as the dominant consumer group, according to consulting firm Bain & Company.
That’s one of the main reasons Burberry is now focusing on the Internet. Ms. Ahrendts said she gets a lot of inspiration from her three children, who spend time surfing the Web and buy most of their clothes online.
Ms. Ahrendts said she is proud that Burberry has more than 699,000 Facebook fans. The company, founded as a maker of outdoor wear in 1856 by the British draper’s apprentice, Thomas Burberry, is also attracting customers via Twitter and Youtube.
Burberry gets about two-thirds of its revenue from clothing. Ms. Ahrendts has sharply reduced Burberry’s reliance on department stores; this year, direct retail overtook wholesale as the company’s biggest sales channel. Burberry, which produces the trench coat in Britain, also benefited from a weaker pound that attracted euro-wielding tourists from mainland Europe.
But Burberry’s major dependence on tourists and the benefit it has derived lately from a favorable exchange rate worries some analysts.
To strengthen the brand, Ms. Ahrendts divided Burberry’s clothing lines more clearly. There’s Prorsum, which includes high-end couture and evening wear worn by celebrities like Gwyneth Paltrow and Liv Tyler. The classic Burberry London clothes are designed to be office and everyday wear, while Burberry Brit offers a more casual weekend look.
The separate children’s line was almost too successful for its own good: Burberry received so much demand this year that it ran into production and shipping problems.
Indeed, the trickiest balancing act is to manage further growth.
“They’ve got the balance sheet to expand when others in the industry can’t, which means they can really benefit once the market recovers,” said Katharine Wynne, an analyst at Investec in London. “But you have to make sure you keep that design heritage and retain that exclusivity.”
Its trench coat — originally designed for the British army in 1914 and later associated with Audrey Hepburn’s character in “Breakfast at Tiffany’s” and Humphrey Bogart’s in “Casablanca” — has come a long way since then.
Thanks to Mr. Bailey, the 38-year old British designer who also worked with Ms. Ahrendts at Donna Karan, there are now trench evening and mini dresses.
In Burberry’s new headquarters along the Thames, its heritage is still visible through the ultra-modern white-brown interior. Ms. Ahrendts recently revived a 108-year old company trademark of an equestrian knight carrying a flag with the words Prorsum — Latin for forward. The image now features prominently in the headquarters’ glass-walled entrance hall.
Inside, a photo of Emma Watson, the young British actress starring in the Harry Potter movies, modeling a $1,300 trench coat covers an entire wall. Next to it, a glass cube showcases a collection of the best-selling trench coat designs over the years.
Seeking to clearly separate Burberry’s different designs, the company is preparing to open its first stand-alone Burberry London and Burberry Brit stores this month, flanking the entrance to the company’s new Manhattan offices on Madison Avenue. It is also in talks with a licensing partner to add a make-up and beauty range next year, and is planning to offer more men’s accessories, such as bags and scarves.
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