Burberry Revamps Strategy to Revive Luxury Fashion Fortunes
A New Era for the Iconic Brand
Luxury fashion house Burberry is undergoing a major transformation to win back customers and boost sales. The “Burberry Forward” strategic overhaul aims to reconnect the brand with its heritage designs and statement pieces, taking a more disciplined approach to product selection.
Shares Soar on Announcement
The news sent Burberry’s shares skyrocketing, with a 22% intraday gain, marking the company’s largest ever single-day increase. The stock closed 17% higher at 15:34 p.m. London time.
Analysts Respond Positively
Industry experts welcomed the move, citing a potential “turning point” for the embattled brand. The plans provide the first insight into Burberry’s repositioning under new CEO Joshua Schulman, who joined from Michael Kors in July.
Course Correction
Schulman acknowledged that the brand had strayed too far from its core products, focusing on niche items over heritage designs. He also noted that the brand’s “elevation strategy” had led to pricing issues, particularly in leather goods.
Reigniting Brand Desire
The new strategy aims to reignite brand desire, improve performance, and drive long-term value creation. Schulman expressed confidence that Burberry’s best days are ahead, building on the company’s strong foundations.
Challenges in the Luxury Sector
Burberry’s sales have fallen 20% for the second consecutive quarter, amid a wider slowdown in the luxury sector. The personal luxury goods market is expected to contract 2% this year.
Analysts Weigh In
Industry experts praised the move, with Piral Dadhania at RBC Capital Markets noting that the focus on heritage and outerwear offers more authenticity in a less competitive category. Mamta Valechha at Quilter Cheviot described it as a “turning point” in a difficult period.
A New Direction
Citi’s Thomas Chauvet expects significant changes in product design, assortment, pricing architecture, distribution, and communication, while maintaining the brand’s global luxury positioning. The strategy shift marks a departure from speculation that Schulman would adopt a ‘British Coach’ strategy, targeting more aspirational consumers.
Aligning Vision and Creativity
Yanmei Tang at Third Bridge welcomed the shift toward higher-end luxury, but emphasized the importance of aligning Schulman’s vision with that of the company’s designers. She cited brands like Louis Vuitton as an example of balancing high-end, artistic collections with accessible, core items.
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