Burberry, the British luxury brand, is grappling with significant financial challenges as it reports a £53m operating loss.
- In just one year, Burberry shifted from a £219m pre-tax profit to an £80m loss, with revenues plummeting sharply.
- Retail and wholesale sectors have seen substantial declines, although licensing revenue showed moderate growth.
- The newly-appointed CEO, Joshua Schulman, has unveiled a strategy known as ‘Burberry Forward’ to revitalise the brand.
- The plan involves realigning the brand’s core focus, optimising pricing strategies, and strengthening market presence.
Burberry has reported an alarming transition from a pre-tax profit of £219 million in the previous year to a pre-tax loss of £80 million. Revenues took a steep dive, reducing by 20% to £1.08 billion. This financial downturn is partially attributed to ‘inconsistent brand execution’ and a diminished focus on the brand’s primary outerwear category and customer segments.
The retail sector experienced a 19% decrease year-on-year, resulting in sales of £885 million. Wholesale sales fell even more dramatically by 29%, amounting to £169 million. However, Burberry’s licensing revenue countered some of these losses, increasing by 5% to £32 million.
Joshua Schulman, who assumed the role of CEO in June, articulated the urgency of addressing these challenges promptly. He emphasised the strength of the Burberry brand, noting its universal appeal among luxury consumers and its enduring presence in outerwear and scarf categories. Schulman is optimistic, stating, ‘Now, we have a clear framework to re-ignite brand desire, improve our performance and drive long-term value creation.’
Key to this revitalisation is the ‘Burberry Forward’ strategy, which aims to align pricing with the brand’s authoritative categories. It includes optimising the presence in both wholesale and outlet markets, and balancing seasonal fashion narratives with campaigns that highlight the company’s core outerwear strengths. The efficient delivery of this strategy is contingent upon enhanced coordination between Burberry’s commercial and creative divisions.
Despite the hurdles, Burberry remains confident in its ability to recover and achieve £3 billion in annual revenue in the long term. The strategy seeks not just to recover lost ground but to foster robust cash generation and improved margins over time.
Burberry’s commitment to strategic realignment and market re-engagement underscores its determination to overcome current financial setbacks.
