How Burberry’s New CEO Is Going Back to Basics
Burberry’s new CEO says he is “acting with urgency” to stabilise the British luxury brand after announcing a pre-tax £80m loss in the six months to end-September.
CEO Joshua Schulman has set out a £40m cost-savings plan and said he would “course correct” to “position Burberry for a return to sustainable, profitable growth”.
The luxury trenchcoat and scarf maker’s £80m pre-tax loss compared with a £219m profit for the same period last year. Revenue over the period fell 22% to £1.1bn as sales fell across all regions and all product categories, dragged down by weaker performance in Asia and America.
Schulman, a former boss of American fashion brands Michael Kors and Coach who only joined Burberry in July, set out measures to “reignite brand desire, improve our performance and drive long-term value creation”, including by refocusing on core products such as trenchcoats and scarves.
The company’s stock has fallen almost 57% over the past year.
How new CEO Joshua Schulman plans to save Burberry
Burberry is synonymous with its famous tan trenchcoats and checked scarves and it is these items that Schulman is pinning the company’s hopes on.
He laid out a plan to turn the company around called “Burberry Forward” to get the business back to generating £3bn in annual revenue.
He added that part of his plan was to increase store productivity and cut prices.
Schulman said: “We have a powerful brand with broad appeal among luxury customers; authority in the outerwear and scarf categories, which have remained resilient through this period; and a strong presence in all key luxury markets. Now we have a clear framework to reignite brand desire, improve our performance and drive long-term value creation.”
The new boss said he had used his first 90 days in post to start a cost-cutting programme aimed at trimming £40m from its cost base each year, about £25m of which will be pushed through during the 2025 financial year.
Burberry said it has already started to move ahead with the strategic plan, appointing new leaders across its marketing, product merchandising and Americas divisions.
The company added that it had also accelerated plans to reduce excess store inventory.
Why is Burberry in such difficulty?
Burberry has suffered amid the global slowdown in demand for luxury goods and a faltering Chinese economy, which has also hit the sales of rivals such as Kering, the Paris-listed owner of labels including Gucci, and LVMH, which owns Louis Vuitton and Christian Dior.
China is the world's biggest spender in the luxury sector, accounting for half of global sales. But as its post-pandemic recovery falters, consumption has flagged, sending jitters through the industry.
China's luxury market is projected to grow at a mid-single-digit rate in 2024 compared with 12% year-on-year growth in 2023.
Burberry’s former boss Jonathan Akeroyd was unable to turn around the business with his own plan, which focused on “Britishness” and handbags, a higher-margin and faster-growing area than clothing and one in which it lags behind rivals such as Hermès and Prada.
Italian outerwear brand Moncler is reportedly eyeing Burberry for possible acquisition.
Before running Michael Kors and Coach, Schulman was president of luxury New York department store Bergdorf Goodman, and spent five years in London as CEO of Jimmy Choo.
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