Burberry boss unveils revival plan after ‘self-inflicted wounds’

Burberry’s new boss has said that the British luxury brand’s wounds were largely self-inflicted as he laid out an urgent turnaround plan to “reignite” the loss-making business.
The heritage trench coat and scarf maker has had a challenging time over the past year amid a downturn in luxury spending and a faltering Chinese economy.
However, Joshua Schulman, the chief executive, acknowledged that its underperformance was also a “consequence of decisions we have taken and it stems from inconsistent brand execution and a lack of focus on our core outerwear category segments”.
He noted that Daniel Lee, the chief creative officer, and his team had also been “working in silo”, leading to a disconnection between its product development and marketing efforts.
Schulman, 53, who took the top in July, said he was “acting with urgency to course-correct” and was “more confident than ever that Burberry’s best days are ahead”, adding: “Our challenges are clear but entirely fixable.”
The bullish outlook sent shares in the business up by 136½p, or 18.7 per cent, to 868p, making the luxury retailer the top riser on the FTSE 250.
Schulman, who was previously the boss of the American fashion brands Michael Kors and Coach, set out a £40 million cost-saving plan for this year and a target to get back to £3 billion in annual revenue, although he did not give a specific time frame to reach it. Under its previous management, the company had a £5 billion long-term revenue target.
Burberry reported revenues of £1.09 billion in the six months to September 28, down 22 per cent on the previous year to September 30, dragged down by a weaker performance in the United States and Asia. It reported a pre-tax loss of £80 million in the six months to September 28, compared with a £219 million profit for the period to September 30 last year.
Schulman said his new plan, called “Burberry forward”, would focus on “timeless” British luxury, leading with outerwear and “earning authority” in other categories, aligning distribution with its product and customer strategy and “reigniting” high-performance culture and capabilities.
The American businessman insisted Burberry would continue to be a luxury brand and he had “no plans to [turn] Burberry into an accessible luxury brand” amid analyst reports that it could become “the British Coach”, referring to the US handbag brand at which he was the former boss.
He said Burberry would have a wider range of price points, including lower ones in certain categories such as leather handbags.
Under Jonathan Akeroyd, its previous boss who left this summer after two years in the role, the company sought to put “Britishness” at the heart of efforts to revive the brand and increased prices to take it more upmarket, but the move failed to resonate with customers. Gerry Murphy, its chairman, has acknowledged that Burberry “probably went a bit too far, too fast” with its premium push.
The British brand, known for its outerwear with signature checks that date back a hundred years, was the worst performer on the FTSE 100 so far this year and dropped out of the index in September due to its low valuation. Shares in Burberry have fallen 56 per cent over the past year. The FTSE 100 has risen by 8 per cent over the same period.
Despite its struggles in mainland China, Schulman said it remained a “very important market for Burberry and for all of luxury”. He said the industry should “never underestimate the power of the Chinese consumer and their resilience and the long-term trajectory of the market; we believe that these are cyclical issues and that, as they have done in the past, the Chinese consumer will come roaring back”.
He declined to comment on rumours that Moncler, the company’s Italian rival, may be considering a bid for the British luxury fashion brand. However, he told reporters that “there are advantages to being an independent luxury brand”, adding: “We have a lot of opportunity ahead and there’s a lot more that we can do as a plc.”
Meanwhile, Kate Ferry, Burberry’s chief financial officer, warned that the brand would take a £3 million to £4 million hit from the rise in employers’ national insurance contributions, announced in the budget last month.
Many Burberry leaders have attempted to revive the troubled British brand over the past decade, implementing various strategies to reconnect with consumers and solidify its place in the luxury market, yet most of these efforts have fallen short.
Now, with Joshua Schulman in charge, the question is whether his strategy can deliver the long-term transformation Burberry desperately needs.
His plan has been received with cautious optimism by analysts, who see its potential but also recognise the weight of Burberry’s past struggles and its cycle of unsuccessful reinvention.
One central element of Schulman’s new turnaround plan is a return to British heritage, combined with a playful “British wit”. This concept, though familiar to Burberry, raises questions about whether it will resonate in a way that past attempts have not. Schulman has highlighted British weather as an inspiration, an idea that fits with the brand’s identity but lacks a clear definition of how it will set Burberry apart in the luxury space.
Part of his vision also involves focusing on a broader range of price points to reach more consumers, a potentially confusing strategy if not handled carefully.
Another key pillar is re-establishing Burberry’s authority in outerwear, a natural focus given the brand’s origins: in 1879, its founder Thomas Burberry invented shower-resistant gabardine, a revolutionary fabric that heralded a new dawn for outerwear. Analysts are generally positive on this move, viewing it as a sensible way to capitalise on Burberry’s strengths, though similar efforts to move back into outerwear have enjoyed limited success in the past.
Schulman also addressed issues with Burberry’s internal structure, saying that Daniel Lee, the creative director, had been working in isolation to the wider head office. To counter this, he plans to strengthen collaboration between the design, marketing and product teams, a move that could enhance the brand’s cohesiveness. Early signs are positive, with Schulman claiming this new alignment is beginning to show results, though it remains to be seen whether it will significantly impact the brand’s performance.
Jelena Sokolova, an analyst at Morningstar, the investment research company, said it was “encouraged by Burberry’s focus on areas where the brand is strongest, namely outerwear and scarves. We previously argued that these areas, which differentiate Burberry from its peers, are not emphasised sufficiently. That said, these products contribute around 40 per cent to 50 per cent of revenue by our estimates and wouldn’t, alone, move the needle for a brand turnaround.”
She added: “Management’s view is that they should provide a positive halo effect for the rest of the range. We’ve long highlighted that Burberry’s disadvantage is a relatively small contribution from products where its brand is the strongest, but we view the renewed focus on them as positive.”