Shoppers walk through Burberry’s Shanghai store.
Kevin Lee | Getty Images
London — Burberry Extensive revamp plans designed to revive the luxury fashion house’s poor fortunes are aimed at winning over shoppers and boosting slumping sales by refocusing on heritage designs and statement pieces.
The company said the “Burberry Forward” strategic overhaul, announced on Thursday, aims to reconnect the brand with its “original purpose” and focus on its core coats and scarves, products. takes a more disciplined approach to selection.
Shares surged more than 22% on the announcement, making it the biggest intraday gainer. The stock ended the day up 18.7 percent. Shares are down about 39 percent year-to-date.
Analysts reacted positively to the news, pointing to a potential “turning point” for the beleaguered brand.
Shulman unveiled a new vision.
The plans provide the first insight into Burberry’s turnaround under new CEO Joshua Shulman, who joined from Michael Kors in July, becoming the brand’s fourth CEO in the past decade.
“Today, we are taking immediate steps to correct, stabilize the business and position Burberry to return to sustainable, profitable growth,” Shulman said in a statement.
Burberry
Shulman said the brand has moved away from its core products in recent years, alienating consumers and focusing more on specialty products than heritage items. He also noted that the brand’s “elevation strategy” led to pricing, particularly in leather goods, being out of sync with its market position.
“Now, we have a clear framework to restore the brand’s ambition, improve our performance and drive long-term value creation. Building on our strong foundations, I believe Burberry’s best days are ahead.” are coming.”
The plans were delivered alongside Burberry’s 2024 interim results, which saw sales fall 20% for the second quarter in a row.
A ‘turning point’ for war-torn Burberry
The underperformance comes amid a broader slowdown in the luxury sector, with the personal luxury goods market contracting 2 percent this year. However, analysts have long pointed to the company’s inherent failings, with successive CEOs trying unsuccessfully to revive the brand and elevate its image.
RBC Capital Markets analyst Pearl Dadhania said Thursday’s overhaul plan has been a long time coming and should allow the brand to work on its strongest areas.
“Focusing on heritage and outerwear is something we are strategically looking forward to as it offers more authenticity in what we believe is a less competitive category,” Dadhania said in a note.
Mamata Walichha, consumer discretionary analyst at Quilter Cheviot, called it “a turning point in a very difficult period”.
Pedestrians walk past the store window of British fashion label Burberry in central London on September 2, 2024.
Henry Nicholas | AFP | Getty Images
Thomas Chauvet, head of luxury goods equity research at Citi, said he expects to see “significant changes” in the areas of product design, assortment, pricing architecture, distribution and communications – all of which are global. Not deviating from the luxury brand positioning.
The change in strategy followed speculation that Shulman would adopt a ‘British Coach’ strategy, using the methods of his former employer to target more aspirational customers. Such approaches may include doubling outlets and increasing exposure to off-price retailers.
Yanmei Tang, an analyst at Third Bridge, welcomed Thursday’s shift toward high-end luxury, but said the success of the overall strategy will depend on Shulman’s ability to align his vision with the company’s designers. .
“Burberry can take inspiration from brands like Louis Vuitton by balancing artistic collections with high-end, accessible, basic items while keeping its British heritage at the forefront,” he said.
Bernstein upgraded his rating to Outperform late last month, saying at the moment it appears the company is “on the right track” following Shulman’s appointment. HSBC followed shortly after.
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