Burberry’s New CEO Unveils ‘Urgent’ Turnaround Plan Amid Financial Struggles
Burberry, the iconic British luxury retailer, is facing a period of significant transformation as it grapples with declining revenues and rising challenges in the competitive luxury fashion industry. The brand, renowned for its timeless trench coats, outerwear, and scarves, reported a sharp 20% drop in revenue for the six months ending 28 September. This was accompanied by an adjusted operating loss of £41 million, a drastic shift from the £223 million profit reported for the same period last year. In light of this dire situation, newly appointed CEO Joshua Schulman has unveiled a strategic, ‘urgent’ turnaround plan aimed at revitalizing the brand, streamlining operations, and securing long-term growth.
Burberry’s Struggles: A Decline in Luxury Appeal
Burberry's financial troubles are emblematic of the difficulties faced by many traditional luxury brands in today’s fast-evolving retail landscape. The company's sales have been sluggish across both its retail and wholesale arms, with the second-quarter results reflecting an ongoing struggle to regain momentum. The brand’s core categories, including outerwear and scarves, which once defined its reputation, have seen diminished performance as Burberry’s pricing strategy faltered, particularly in leather goods. The higher prices on certain products, the company admitted, did not align well with Burberry’s established category authority, leading to a disconnect between the brand’s luxury image and consumer expectations.
In addition to pricing missteps, Burberry’s brand execution has also faced internal inconsistencies, particularly in marketing and product offerings, contributing to weaker sales. While the pandemic’s impact on retail has certainly played a role, the larger issue appears to be a lack of cohesive strategy in executing its long-standing brand values—something that Schulman aims to address head-on.
Schulman’s Vision for a Turnaround
Joshua Schulman, who took the reins as CEO in July, has wasted no time in laying out an ambitious strategic vision designed to reposition Burberry as a leader in the luxury fashion market. In his first few months at the helm, Schulman has initiated a focused, tactical plan that he describes as urgent, with a core emphasis on reinvigorating customer desire and improving overall brand performance.
The new plan revolves around Burberry’s strength in its legacy categories—outerwear and scarves. These iconic products have long been associated with Burberry’s British heritage and continue to hold significant appeal among luxury consumers. By focusing on these key categories, Schulman hopes to re-establish Burberry’s authority and leadership in the global luxury fashion market.
“Now, we 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,” said Schulman.
Strategic Focus: Core Categories and Realigned Pricing
A key component of Schulman’s strategy is to place renewed emphasis on Burberry’s stronghold categories. The brand’s outerwear, which includes its iconic trench coats, and its scarves—both staples of its luxury offering—will take center stage as part of a product refocus. Burberry has long been recognized for its craftsmanship and quality in these areas, and by doubling down on these strengths, Schulman aims to re-establish a sense of luxury and exclusivity that is currently lacking.
Another critical element of Schulman’s turnaround plan is to recalibrate the brand’s pricing strategy. Burberry has acknowledged that its pricing increases, particularly in leather goods, have not resonated with its customer base. To address this, the company will work to align its pricing more closely with its luxury category authority. This adjustment will ensure that Burberry remains competitive in the luxury sector without alienating its core customers.
“We’ve identified that pricing in certain categories, especially leather goods, has not always aligned with our category authority,” Schulman admitted. “We’re moving to ensure that all our categories reflect the brand’s true luxury positioning.”
Financial Reforms: Cutting Costs and Streamlining Operations
In addition to refocusing on its core products, Burberry is implementing a series of cost-saving measures aimed at restoring financial health and operational efficiency. The company has introduced a £40 million cost-cutting program, targeting areas where operational expenses can be reduced without compromising product quality or brand prestige. The brand has also made the difficult decision to suspend its dividend payments for 2025, choosing to conserve cash and reinvest it into the business to drive growth and recovery.
This emphasis on fiscal prudence is indicative of Burberry’s commitment to returning to profitability as soon as possible. The goal is to streamline operations, reduce waste, and invest more strategically in areas that will yield the highest returns.
“We are acting with urgency to course-correct and stabilize the business,” Schulman said, underscoring the importance of making the necessary adjustments swiftly. “We are prioritizing long-term value creation while managing costs effectively.”
Global Presence: Expanding Burberry’s Reach
While Burberry has faced financial struggles, the brand continues to have a strong presence in key luxury markets worldwide. Schulman’s strategy aims to capitalize on this international appeal, focusing on markets where Burberry’s brand recognition remains robust. The company will also work to strengthen its digital presence, tapping into the growing demand for online luxury retail experiences.
Burberry has made strides in expanding its digital strategy in recent years, but the brand will need to continue evolving to meet the demands of the modern consumer. Emphasizing a more seamless online and offline experience will be key to attracting younger, digitally savvy consumers, particularly in regions such as China, where Burberry’s digital footprint is expanding.
Related: Burberry Prepares for Potential Takeover by Moncler Amid Strategic Shifts and Market Pressures
A New Chapter: Stability and Growth
Schulman’s approach signals a new chapter for Burberry, one focused on stability, operational efficiency, and long-term growth. While the company has faced setbacks, the brand’s fundamental strengths remain intact, and Schulman is confident that Burberry can recover and thrive in the future.
Burberry’s heritage, which dates back to 1856, has always been rooted in high-quality craftsmanship and British sophistication. By refocusing on what made the brand great in the first place, and making key operational changes, Burberry hopes to achieve a new era of profitability and growth. Schulman’s strategic vision is to reposition the brand for long-term success, embracing both its storied past and the innovations needed for a sustainable future in the competitive luxury market.
The road to recovery will undoubtedly be challenging, but with Schulman’s clear direction and the company’s renewed focus on core strengths, Burberry may soon be poised to regain its stature as one of the world’s leading luxury brands.
A Strong Future Ahead
Burberry’s immediate future will be shaped by the swift actions taken under Joshua Schulman’s leadership. The turnaround plan is ambitious but necessary, focusing on aligning product offerings, pricing, and operational efficiency with the expectations of the modern luxury consumer. With a clear strategy in place, Burberry’s best days may well be ahead, as the company works to rebuild its financial health and reclaim its place as a global luxury powerhouse.
