Embattled fashion house Burberry reveals massive overhaul sending shares to an all-time high
Burberry has launched a sweeping strategic overhaul, dubbed "Burberry Forward," aimed at reversing its declining fortunes by refocusing on heritage designs and core products. The announcement sent shares soaring over 22% intraday, marking the luxury brand's biggest-ever single-day gain as investors welcomed the new direction.
The plan, the first major initiative under new CEO Joshua Schulman, who joined from Michael Kors in July, seeks to reconnect the brand with its "original purpose." It emphasizes a more disciplined product selection, prioritizing staple items like coats and scarves over niche offerings. Schulman acknowledged the brand had drifted, stating its recent "elevation strategy" had caused pricing, particularly for leather goods, to fall out of alignment with its market position.
"Today, we are acting with urgency to course correct, stabilise the business and position Burberry for a return to sustainable, profitable growth," Schulman said in a statement.
The strategic shift comes alongside disappointing 2024 interim results, which revealed a 20% sales decline for the second consecutive quarter. This slump reflects both a broader slowdown in the luxury sector and persistent challenges specific to Burberry, which has cycled through four CEOs in the past decade.
Analysts largely viewed the announcement as a positive turning point. RBC Capital Markets noted that a focus on heritage and outerwear offers "more authenticity in a less competitive category," while Citi anticipates "significant changes" across product design, pricing, and distribution.
The strategy appears to move away from earlier speculation that Schulman would implement a "British Coach" model, which might have involved expanding outlets and off-price retail. Instead, the focus is on reinforcing Burberry's position as a global luxury brand by leveraging its British heritage.
As Bernstein, which recently upgraded the stock, noted, the company now seems "set on the right course." The success of the revival will depend on Schulman's ability to align his business strategy with the creative vision of the design team to reignite consumer desire for the iconic label.
