Burberry boss unveils urgent revival plan after loss

Burberry’s new boss has laid out an “urgent” new turnaround plan to revive the troubled British brand as sales continued to slide and it slipped into the red in the first half of the year.
The luxury trenchcoat and scarf maker reported a pre-tax loss of £80 million in the six months to the end of September, compared with £219 million profit for the same period last year.
Revenue over the period fell 22 per cent to £1.08 billion as sales fell across all regions and all product categories.
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The company said it would not pay a dividend for the period. Last year, the company declared an interim payout of 18.3p per share.
Burberry warned that it was too early to determine whether its second-half results would fully offset the first-half adjusted operating loss before the Christmas trading period and amid an uncertain macroeconomic environment. Wholesale revenue is expected to decline by about 35 per cent in the full-year.
Joshua Schulman, the newly appointed chief executive, said Burberry’s “recent underperformance has stemmed from several factors, including inconsistent brand execution and a lack of focus on our core outerwear category and our core customer segments”.
He laid out a plan to turn the company around called “Burberry Forward”, which aims to “reignite brand desire, improve our performance and drive long-term value creation” and get the company back to generating £3 billion in annual revenue.
He said the company was “acting with urgency to course-correct, stabilise the business and position Burberry for a return to sustainable, profitable growth. We have a powerful brand with broad appeal among luxury customers; authority in the outerwear and scarf categories, which have remained resilient through this period; and a strong presence in all key luxury markets. Now we have a clear framework to reignite brand desire, improve our performance and drive long-term value creation.”
Schulman’s plan, announced on Thursday, will 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.
Burberry has suffered amid the global slowdown in demand for luxury goods and a faltering Chinese economy, which has also hit the sales of rivals such as Kering, the Paris-listed owner of labels including Gucci and Balenciaga, and the Aim-quoted Mulberry.
The brand’s problems have also largely been of its own making: industry onlookers have said that the label has struggled to define its identity and has lost sight of its customers.
Burberry’s former boss Jonathan Akeroyd was unable to turn around the business with his plan, which focused on “Britishness” and handbags, a higher-margin and faster-growing area than clothing and one in which it lags behind rivals such as Hermès and Prada.
In July it was announced that Akeroyd would be replaced by Schulman, a former boss of the American fashion brands Michael Kors and Coach, signalling that there was likely to be another change in direction for the brand.
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 because of its low valuation. Shares in Burberry have fallen 56 per cent over the past year. The FTSE 100 has risen 8 per cent over the same period.
There have also been reports that Burberry could be taken over by the luxury Italian brand Moncler. Correspondence seen by The Mail on Sunday showed that staff had been told about a potential offer, although details of the bid have not yet been confirmed.
Burberry shares rose 11 per cent, or 83p, to 813½p in early trading.