Shoppers walk past the Burberry Shanghai store
Kevin Lee | Getty Images
london – Burberry The brand aims to win back shoppers and boost flagging sales by refocusing on traditional designs and statement pieces in a sweeping revamp plan aimed at reviving the ailing luxury fashion house.
The “Burberry Forward” strategic overhaul announced on Thursday aims to reconnect the brand to its “original purpose” while taking a more disciplined approach to product selection, focusing on its flagship coats and scarves, the company said.
After the news was announced, the stock price rose more than 22%, the largest intraday increase in history. The stock closed the day up 18.7%. Year to date, shares are down about 39%.
Analysts responded positively to the news, noting that the troubled brand could be facing a “turning point.”
Schulman announces new vision
The plans provide the first insight into Burberry’s repositioning under new chief executive Joshua Schulman. , becoming the brand’s fourth CEO in the past decade.
“Today, we are taking urgent action to correct course, stabilize the business and prepare Burberry to return to sustainable profitable growth,” Schulman said in a statement.
Burberry
Schulman said the brand had strayed too far from its core products in recent years, alienating consumers and focusing too much on niche products rather than traditional products. He also pointed out that the brand’s “enhancement strategy” resulted in pricing (particularly on leather goods) that was out of sync with its market position.
“We now have a clear framework to reignite desire for the brand, improve our performance and drive long-term value creation. Building on our solid foundation, I believe Burberry’s best days are ahead,” he added.
The plans were released alongside Burberry’s 2024 interim results, which showed Sales fell 20% for the second consecutive quarter.
‘Turning point’ for troubled Burberry
Amidst the poor performance, the luxury goods industry as a whole is slowing down, and the personal luxury goods market will It contracted 2% this year. However, analysts have long pointed to the company’s inherent flaws, and successive CEOs have tried, but failed, to revive the brand and improve its image.
RBC Capital Markets analyst Piral Dadhania said Thursday’s overhaul is a long process that should allow the brand to hone its strengths in its strongest areas. practice.
“Strategically, we have been waiting to focus on traditional wear and outerwear as, in our view, it offers more authenticity in a less competitive category,” Dardanha said in a note.
Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, described it as “a turning point in a very difficult time.”
Pedestrians walk past the window of the British fashion brand Burberry store in central London on September 2, 2024.
Henry Nichols | AFP | Getty Images
Thomas Chauvet, head of luxury equity research at Citi, said he expected “significant changes” in product design, assortment, pricing structures, distribution and communications without deviating from the positioning of a global luxury brand.
The shift in strategy comes amid speculation that Schulman will adopt a “UK coaching” strategy, using the methods of his former employer to target more aspirational consumers. These approaches may include doubling down on investment in outlet stores and increasing exposure to discount retailers.
Third Bridge analyst Yanmei Tang welcomed the shift toward high-end luxury goods on Thursday but said the success of the overall strategy will depend heavily on Schulman’s ability to align his vision with that of the company’s designers.
“Burberry could take inspiration from brands like Louis Vuitton and balance high-end art collections with accessible core pieces, keeping British heritage at the forefront. The success of this strategy will depend on Schulman’s business acumen and The consistency between Lee’s creative vision,” she said.
Bernstein upgraded its rating to outperform late last month, saying at the time that the company appeared to be “on the right path” following Schulman’s appointment. HSBC followed suit.
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