Burberry, Plaid in Check, Is Hot Again

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Ahrendts also is forging ahead with the company's £50 million ($99.5 million) "Atlas" program to boost efficiency and overhaul back-office systems. Such steps are crucial to help management predict sales more accurately. Burberry also wants to move merchandise into stores faster, which should improve the quality of the collections and boost revenues, Citigroup (C) analyst Constanza Mardones wrote in a note to investors.

In her nine months as CEO, Ahrendts has won plaudits for her efforts in this direction. Stores now receive deliveries every 10 weeks instead of twice a year. To boost revenue per unit, Burberry is reducing reliance on department store concessions and wholesalers, instead placing more weight on its own stores, which account for 70% of revenues.

Expanding Without Diminishing

The company has already pulled some revenues in-house by buying up its franchised outlets in Taiwan and taking over its women's wear business in Spain from El Corte Ingles department store. In the third quarter ending Dec. 31, sales rocketed 22% to £206 million ($410 million), from £168 million ($334 million). Those moves should have the additional effect of giving Burberry better control of customer service and presentation of merchandise—important aspects of the brand experience, notes Interbrand's Clifton.

Such control will be crucial as Burberry moves to expand abroad without diminishing its cachet. The company already has opened stores in the Ukraine, Austria, and Spain, and is planning new outlets in Prague, Tampa, and Los Angeles. Ahrendts has even talked of opening more stores in the U.S. midwest. Though those plans have yet to materialize, they've caused some controversy among the fashion pack who fear dilution of the brand.

The challenge for Burberry, says Clifton, will be to "keep building the brand and maintain a balance between cachet and accessibility." And, of course, to keep the plaid in check.

For a slide show of Burberry fashions, click here

Norton is a BusinessWeek.com correspondent in London .