Burberry will use its British heritage appeal to win back customers by focusing on trench coats and scarves and be less ambitious with prices on bags and shoes, the loss-making luxury brand said in a revamp that sent its shares up sharply.
New CEO Joshua Schulman laid out his turnaround plans Thursday after Burberry reported a loss for the first half of its financial year and announced a £40 million ($50.67 million) cost savings program.
The group’s shares surged more than 14% Thursday but are still down more than 40% so far in 2024.
“We took pricing too high across the board,” Schulman told investors and analysts, setting out his assessment of what went wrong at Burberry. “We created new brand codes… that were not familiar or recognizable for our customers.”
Looking ahead, he said Burberry would be incredibly disciplined with its brand and market itself as timeless British luxury. Its recent campaigns have focused on outerwear and scarves and featured British celebrities including model Cara Delevingne, rapper Little Simz and actor Olivia Colman.
Burberry, like other luxury goods companies, has had a tough time as consumers’ appetite for luxury fell in China and elsewhere, but the retailer has lagged in the industry-wide slowdown.
Schulman, previously CEO at Coach and Michael Kors, is Burberry’s fourth CEO in a decade, and the brand has also had three creative directors in the last seven years, each bringing new styles and logos that confused the brand identity.
Schulman told reporters Burberry would add more lower-priced “entry-level” products to its range as part of a pricing shift. He acknowledged that price hikes had gone too far and said the brand had the most pricing power in outerwear while it has less in handbags.
“It is only in the recent 18 to 24 months that we really were trying to stretch our pricing on absolutely every product,” Schulman said, adding that he sees opportunities in handbags priced under €2,000 ($2,109.00), with a “sweet spot” at €1,600 ($1,681).
But he said Burberry’s positioning would remain in luxury and there were no plans to make it an “accessible” luxury brand.
Burberry’s creative director Daniel Lee, who joined the brand two years ago, had made his name at Bottega Veneta with a series of top-selling “it” shoes and bags. But his designs at Burberry, which is not primarily known for leather goods, have not found the same success.
Leather goods and shoes underperformed in the first half, Burberry said, while outerwear did better than average.
Burberry made an adjusted operating loss of £41 million ($52 million) in the first half and said it was too early to tell, with the festive period ahead, whether it would make a profit for the full year.
Burberry is widely seen as a takeover target. Recent media reports that Italy’s Moncler was preparing a bid had boosted the stock.
Schulman, asked if Burberry was for sale, told reporters he would not comment on speculation, but added that Burberry’s independence separate from a luxury conglomerate was an asset.
