British fashion house Burberry reports a significant operating loss, leading to strategic shifts.
- A pre-tax loss of £80m was announced, contrasting last year’s £219m profit.
- Revenue dropped 20% to £1.08bn; retail sales and wholesale sales saw sharp decreases.
- CEO Joshua Schulman outlines a recovery strategy aimed at sustainable growth.
- The ‘Burberry Forward’ plan focuses on key segments, pricing, and brand alignment.
Burberry, the renowned British luxury fashion brand, recently announced an operating loss of £53 million for the six months ending September 28, 2024. This stark change highlights the company’s current financial challenges.
The reported pre-tax loss reached £80 million, a dramatic shift from the £219 million profit achieved during the same period last year. Burberry’s total revenue decreased by 20%, settling at £1.08 billion. A significant contributor to this decline was the 19% drop in retail sales, bringing the figure to £885 million. Wholesale sales also took a hit, falling 29% to £169 million, although licensing revenue increased by 5% to £32 million.
The company has acknowledged several factors that contributed to these disappointing results. These include inconsistent brand execution and a lack of focus on both the core outerwear category and the key customer segments. These issues have necessitated a significant shift in strategy, with the new CEO, Joshua Schulman, at the helm since June 2024.
Schulman stated, “Today, we are acting with urgency to course correct, stabilize the business and position Burberry for a return to sustainable, profitable growth.” He emphasized the brand’s strong presence in the luxury market and its authority in outerwear and scarves, believing these areas to have remained robust during this challenging period. Schulman expressed confidence in the brand’s potential, claiming, “Building on our strong foundations, I am confident that Burberry’s best days are ahead.”
To address these issues, Burberry has launched a new strategic initiative known as ‘Burberry Forward’. This plan aims to refine pricing strategies in line with category authority, optimize brand presence in wholesale and outlet markets, and balance seasonal fashion messages with campaigns that celebrate the brand’s strength in outerwear. A key aspect of this strategy is the enhanced collaboration between Burberry’s commercial and creative teams.
Despite the current setbacks, Burberry is optimistic about its long-term future. The brand is working towards a goal of achieving £3 billion in annual revenue over time while improving profit margins and increasing cash flow.
Burberry is poised for recovery with a strategic plan focused on overcoming present challenges and driving future growth.
