Burberry’s Turnaround Hopes Ride on Festive Season Sales
As the luxury brand prepares to report its crucial festive season sales this Friday, investors are holding their breath, hoping to see signs of progress in its turnaround efforts. Joshua Schulman, who took the reins as CEO six months ago, has pledged to revitalize the brand and reclaim lost market share in a struggling luxury market.
A Focus on Heritage Products
Schulman’s strategy centers around products that Burberry is best known for, such as trench coats, which have historically been a staple of the brand. By refocusing on these iconic products, Burberry aims to win back customers who were alienated by less recognizable designs and higher prices.
US Market Holds Promise
The US market could be a key catalyst for Burberry’s turnaround, with Schulman hinting at plans to improve the brand’s visibility in the region. As an American himself, Schulman has strong relationships with department stores from his time at Coach, which could help Burberry gain more prominence in the US market.
Pricing Strategy Reflects US Demand
Burberry’s pricing strategy suggests that it expects stronger demand in the US. The brand increased its most expensive price point by 115% in the US in the year to November 2024, significantly more than in Italy or China. This move could pay off, as luxury brands everywhere are hoping to capitalize on wealthy Americans’ increased spending power.
A Return to Fundamentals
Schulman’s turnaround plan is built around a return to Burberry’s core DNA, highlighting its heritage trench coats and scarves in new advertising campaigns. By focusing on its iconic products, Burberry aims to rebuild its brand reputation and drive sales growth.
Analysts Expect Improvement
Analysts expect Burberry to report a 12% decline in comparable sales for the quarter to end-December, an improvement from the 20% drop it reported for the six months to end-September. While the road to recovery will be long, Schulman’s sensible approach has given the company time to build back without risking investors’ disappointment.
Immediate Goals
Burberry’s immediate goal is to return to £3 billion in annual revenue, a level it last achieved in its 2022-2023 financial year. While this will take time, analysts are optimistic about the brand’s prospects, with sales expected to come in at £2.39 billion in the financial year to end-March 2025.
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