Burberry launches urgent turnaround plan to save the brand
- Burberry's CEO Joshua Schulman says the brand is undergoing an urgent "course correct."
- The strategy aim comes as the luxury brand reports revenue plummeted 22% in its interim results.
Things have gone from bad to worse at Burberry, the beleaguered British luxury brand.
On Thursday, the company's CEO said he is "acting with urgency" to stabilize the luxury brand as it reported a 22% revenue decline in the six months ending in September in interim results.
CEO Joshua Schulman said the company is implementing a "course correct" strategy to address its long-standing woes and "position Burberry for a return to sustainable, profitable growth.'"
Dubbing the strategic shift "Burberry Forward," the market has responded positively, with shares rising 14% in early trading on Thursday.
Schulman said the company's underperformance stems from its "inconsistent brand execution" and a "lack of focus" on its outerwear category and core customers.
The report also indicated the brand's attempt to modernize came at the expense of its heritage and identity and suggested that it has priced out many customers in its bid to pursue "brand elevation."
"They pushed the pricing where the brand didn't feel legitimate," Jelena Sokolova, a senior equity analyst at Morningstar, previously told BI. "I've heard from some people, with a $2,500 bag, you might as well just go for Louis Vuitton, you wouldn't buy Burberry."
Part of Burberry's new strategy to right the ship includes the appointment of new leaders across its marketing and product teams and the launch of new campaigns that show the brand is going back to its roots.
These include the "It's Always Burberry Weather" outerwear campaign starring British and Irish celebrities like Barry Keoghan and longtime ambassador Cara Delevigne.
Many brands are hurting from an industry-wide slump in luxury, fueled partly by waning demand in China, but Burberry has been one of the hardest hit.
In July, after reports emerged that the brand planned to cut hundreds of jobs, it then reported a decline in sales and said it would suspend its dividend payments to shareholders. Shortly after, the company announced it was ousting its CEO, Jonathan Akeroyd.
Earlier this month, rumors swirled that the brand was facing an acquisition from Moncler. However, this has since been denied.