Burberry, under new CEO Joshua Schulman, is implementing a strategic plan to address financial losses and revitalize the brand.
- The luxury retailer has seen its revenue drop by 20% over six months, creating significant challenges.
- Burberry reported an adjusted operating loss of £41m, compared to a £223m profit the prior year.
- Schulman is focusing on Burberry’s core strengths, such as outerwear and scarves, while adjusting pricing strategies.
- A £40m cost-saving program and a suspension of the 2025 dividend are part of measures to stabilize the business.
Burberry is undertaking a crucial transformation under the leadership of its new CEO, Joshua Schulman, aimed at reversing its recent financial downturns. The strategic plan intends to boost brand appeal, enhance performance, and create long-term value amidst declining revenues. The company’s revenue dipped by 20% in the first half of the fiscal year, leading to a notable adjusted operating loss of £41 million. This represents a stark contrast to the £223 million profit recorded in the same timeframe last year, highlighting the pressing need for change.
The retailer’s second-quarter results mirrored the first, with a year-on-year comparable store sales drop of 20%. A significant factor in this downturn has been price increases, particularly in leather goods, which the company acknowledges as inconsistently aligned with its market authority. Schulman is redirecting focus to Burberry’s core strengths, emphasizing popular products like outerwear and scarves, and readjusting leather goods pricing to better fit the brand’s reputation.
Recognizing the need for operational efficiencies, the company has introduced a £40 million cost-saving initiative and decided to halt its 2025 dividend. Schulman, who joined the company in July, remains optimistic about the new strategy’s potential to lead Burberry towards recovery. He described Burberry as an ‘extraordinary luxury brand,’ blending heritage with innovation. Schulman stresses that the company’s purpose of designing weather-protective clothing is increasingly relevant today, with outerwear and scarves maintaining resilience amid challenges.
Schulman attributes recent underperformance to issues like inconsistent brand execution and a lack of concentration on the core customer base. He emphasizes the urgent actions taken to correct course and stabilize the brand, aiming for sustainable and profitable growth. With a strong presence in luxury markets worldwide, Burberry continues to appeal broadly to luxury consumers, possessing notable strength in outerwear and scarves even during tough economic periods.
Schulman’s strategy outlines a clear path forward for Burberry, fostering optimism for its potential recovery and future growth.
