Burberry, the storied British luxury house, unveiled an ambitious new strategy on Thursday aimed at reconnecting with its roots through a focus on heritage designs and classic outerwear. CEO Joshua Schulman, who joined the brand in July, revealed the "Burberry Forward" plan, outlining a blueprint intended to realign Burberry's image and restore its flagging fortunes. The announcement was met with enthusiasm in the market, as Burberry shares surged 18.7%-marking the biggest intraday gain in the company's history-though the stock remains down by 40% for the year.
"Today, we are acting with urgency to course correct, stabilize the business, and position Burberry for a return to sustainable, profitable growth," Schulman said. He noted that Burberry had drifted too far from its core, leaving consumers behind as it chased niche product segments. "We created new brand codes... that were not familiar or recognizable for our customers," Schulman told analysts and investors. The push for "elevation" in pricing, particularly for leather goods, ultimately led to a misalignment with market expectations, he admitted.
Central to Burberry's revival strategy is a renewed focus on the brand's iconic outerwear and signature pieces, such as trench coats and scarves, long considered synonymous with British luxury. The pivot seeks to reclaim Burberry's heritage while presenting a more disciplined product range to consumers. "Focus on heritage and outerwear is what we have been waiting for," said Piral Dadhania, an analyst at RBC Capital Markets. "It offers more authenticity in a less competitive category in our view."
The need for change is underscored by a 20% sales decline for two consecutive quarters, reflecting both internal missteps and broader market challenges in luxury goods. As part of the overhaul, Burberry will recalibrate its pricing strategy to offer a range of "entry-level" products that remain consistent with its luxury status. "We took pricing too high across the board," Schulman acknowledged, adding that the brand's strength remains concentrated in outerwear. For leather goods, pricing power was more limited, and the market push failed to resonate.
To support the repositioning, Burberry plans new campaigns featuring high-profile British personalities, including model Cara Delevingne and actor Olivia Colman, emphasizing its British luxury roots. The brand's creative director, Daniel Lee, will work in close partnership with Schulman to align product design with this renewed focus. Lee's work at Bottega Veneta was well-regarded for its high-end designs, but the reception to his leather goods at Burberry has been more mixed. Schulman remains confident that outerwear will lead the way in the brand's resurgence.
Analysts are cautiously optimistic about Burberry's trajectory under Schulman. "Burberry could take inspiration from brands like Louis Vuitton by balancing high-end, artistic collections with accessible, core items, keeping its British heritage at the forefront," said Yanmei Tang, an analyst at Third Bridge. Tang highlighted the importance of Schulman's business acumen aligning with Lee's creative direction to make the turnaround successful.
The strategic shift comes amid speculation about Burberry's long-term independence, with rumors swirling about potential takeover interest from Moncler. Schulman declined to comment directly on speculation but asserted that Burberry's independence remains a strategic advantage. "I won't comment on speculation, but our independence is an asset," he told reporters.
Amid these developments, Burberry's cost-cutting initiative aims to save $50.67 million, a necessary measure as the brand reported an adjusted operating loss of $52 million in the first half of the fiscal year. The stakes are high for Burberry's turnaround efforts, but with a renewed focus on what made it a British luxury icon, there is hope that the brand can regain its luster in the competitive luxury market.
