• Burberry aims to boost flagging sales by refocusing on heritage designs and statement pieces as part of sweeping overhaul plans announced on Thursday.
• Shares jumped more than 22% on the announcement, notching their biggest intraday gain on record.
• Analysts have hailed the project as a potential “turning point” for the luxury fashion house’s struggling fortunes.

LONDON – Burberry aims to win back shoppers and boost flagging sales by refocusing on heritage designs and statement pieces as part of sweeping overhaul plans intended to revive the luxury fashion house’s struggling fortunes.

The “Burberry Forward” strategic overhaul, announced Thursday, aims to reconnect the brand to its “original purpose” while taking a more disciplined approach to product selection, with a focus on its core coats and scarves, it said. the company.

Shares jumped more than 22% on the announcement, to post the biggest intraday gain on record. The stock ended the day up 18.7%. Shares are down about 39% year to date.

Analysts reacted positively to the news, highlighting a potential “turning point” for the struggling brand.

Schulman unveils new vision

The plans provide a first glimpse of Burberry’s repositioning under new CEO Joshua Schulman, who joined Michael Kors in July, becoming the brand’s fourth CEO in the past decade.

“Today, we are acting urgently to course-correct, stabilize the business and position Burberry for a return to sustainable, profitable growth,” Schulman said in a statement.

Schulman said the brand has strayed too far from its core products in recent years, alienating consumers and focusing too much on niche products rather than heritage items. He also noted that the brand’s “elevation strategy” had led to pricing, particularly in the leather goods sector, being out of sync with its market position.

“We now have a clear framework to reignite brand desire, improve our performance and drive long-term value creation. Building on our strong foundations, I am confident that Burberry’s best days are ahead. come,” he added.

These plans were delivered alongside Burberry’s interim results for 2024, which saw sales drop by 20% for the second consecutive quarter.

A “turning point” for struggling Burberry

This underperformance comes amid a broader slowdown in the luxury sector, with the personal luxury goods market expected to see a decline. 2% contract This year. However, analysts have long pointed out the company’s inherent failures, as successive CEOs have tried in vain to revive the brand and improve its image.

Piral Dadhania, an analyst at RBC Capital Markets, said the revamp plan announced Thursday was a long time coming and should allow the brand to focus on its strengths.

“The focus on heritage and outerwear is what we expected in terms of strategy as it offers more authenticity in a less competitive category in our view,” Dadhania said in a note.

Mamta Valechha, consumer discretionary analyst at Quilter Cheviot, described it as a “turning point in what has been a very difficult period”.

Thomas Chauvet, head of luxury equity research at Citi, said he expects “significant changes” in the areas of product design, assortment, architecture of prices, distribution and communication, without straying from the global positioning of the luxury brand.

The change in strategy follows speculation that Schulman would adopt a “British coach” strategyusing his former employer’s methods to target more ambitious consumers. Such methods could have included doubling the number of outlets and increasing exposure to low-cost retailers.

Yanmei Tang, an analyst at Third Bridge, welcomed the move toward high-end luxury on Thursday, but said the success of the overall strategy would depend heavily on whether Schulman can align his vision with that of the company’s designers. ‘business.

“Burberry could take inspiration from brands like Louis Vuitton by balancing high-end artistic collections with accessible staples, while keeping its British heritage at the forefront. The success of this strategy will depend on the alignment between Schulman’s business acumen and Lee’s creative vision,” she said.

Bernstein upgraded his rating to outperform late last month, saying at the time that the company appeared “on track” following Schulman’s appointment. HSBC followed suit shortly after.