Burberry not alone in burning own merchandise

BURBERRY, which has been in the crosshairs for burning tens of millions of dollars of its products, is far from the only firm to destroy unsold goods to maintain the exclusivity and luxury mystique of their brands.

In its annual report the British fashion firm acknowledged that it had burned unsold clothes, accessories and perfume worth £28.6 million ($37 million).

More than a third of the products destroyed were perfumes, which the company said was due to the rupture of its licence with US fragrances manufacturer Coty.

Since Thursday, when that piece of information buried in its 200-page report came to light, Burberry has come under scrutiny on social and news media for the practice.

But industry experts say Burberry is far from alone.

“It is a widespread practice in the fashion industry, it’s commonplace,” said Arnaud Cadart, a portfolio man- ager at Flornoy and Associates who has previously followed the luxury industry as an analyst.

He said very few luxury brands hold sales to get rid of stock and instead destroy unsold products. Fashion items with short cycles increases the amount of leftover stock and items destroyed.

“Once you do some private sales to employees and journalists, it’s dumping,” he said.

Burberry said on Thursday it had measures in place to minimise its amount of excess stock, that it takes its environmental obligations seriously and harnesses the energy from burning the items.

“On the occasions when disposal of products is necessary, we do so in a responsible manner and we continue to seek ways to reduce and revalue our waste,” the firm said.

The destruction of goods is reflected in financial accounts, but in a manner “difficult to comprehend, often under an entry ‘impairment of inventories’”, said Cadart.

French luxury giant LVMH said in its latest annual report that “provisions for impairment of inventories are . . . generally required because of product obsolescence (end of season or c ol l e c t i on, e x pi ra t i on dat e approaching, etc) or lack of sales prospects.”

Hermes’s annual report also spoke of product “obsolescence (notably finished seasons or collections)”.

Clear indications of the amount of products destroyed were not provided.