Burberry Group PLC’s interim results for the 26 weeks ending 28 September 2024 revealed a brand in the midst of reinvention.
CEO Joshua Schulman, who joined in July, admitted the company’s “recent underperformance has stemmed from several factors, including inconsistent brand execution and a lack of focus on our core outerwear category and our core customer segments.”
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This honest assessment marked the foundation of Burberry’s new strategic framework, titled Burberry Forward.
Schulman emphasised the importance of rediscovering the brand’s essence: “Our original purpose to design clothing that protects people from the weather is more relevant than ever.” By focusing on iconic outerwear and scarves, Burberry aims to reaffirm its position as a leader in timeless British luxury.
Louise Deglise-Favre, Senior Apparel Analyst at GlobalData, noted, “Burberry’s attempt to compete with luxury giants like Louis Vuitton and Hermès through diversification and price hikes strayed too far from its core identity. This led to uninspired designs and a mismatch between pricing and consumer expectations.”
She added that Schulman’s refocus on heritage is a step in the right direction, especially as the brand aims to reclaim its appeal in key markets like the Asia-Pacific and Americas.
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By GlobalDataImmediate actions to reignite growth
Under the Burberry Forward framework, the brand has already taken decisive actions to stabilise its position. Key initiatives include the launch of the “It’s Always Burberry Weather” campaign and the introduction of Scarf Bars, both designed to emphasise the brand’s strengths in outerwear and scarves.
Deglise-Favre highlighted the significance of this renewed focus, stating, “Schulman’s pivot towards the brand’s iconic products is likely to resonate with luxury consumers. By aligning pricing with customer expectations, Burberry can attract a broader audience, particularly aspirational shoppers seeking authentic British luxury.”
The company has also implemented cost-saving measures, unlocking annualised savings of approximately £40 million. This includes addressing inventory overhang and ensuring the brand’s products retain a sense of scarcity—an essential component of luxury appeal.
Challenges and opportunities
Burberry’s strategy includes tackling the brand’s pricing and distribution challenges.
“Since the 1990s, successive CEOs have pursued the elusive goal of elevating Burberry’s premium price position into luxury,” Deglise-Favre explained, “but aggressive discounting and factory outlet sales have undercut the brand’s perceived value.”
Schulman’s plan aims to correct this by rebalancing product offers and pricing to align with the brand’s heritage and category authority.
Despite these challenges, there are signs of optimism. Burberry’s share price has risen 15% since the strategy announcement, signalling investor confidence in Schulman’s vision.
Deglise-Favre added, “By steering the brand back to its core areas of expertise, Burberry hopes to reignite desirability, particularly in markets where consumers value authentic European luxury brands.”
While rumours of a potential Moncler acquisition remain unconfirmed, Burberry is firmly focused on executing its new strategy. Schulman expressed confidence in the brand’s future, stating, “Building on our strong foundations, I am confident that Burberry’s best days are ahead.”
By embracing its heritage, leveraging its iconic products, and addressing its pricing strategy, Burberry is positioning itself for a sustainable and profitable future in the competitive luxury market.
