Burberry has unveiled a £40m cost-cutting programme as its new chief executive pledged to “stabilise the business” with a turnaround plan aimed at reviving the fortunes of the ailing British luxury fashion brand.
Joshua Schulman, the former Coach boss who replaced his ousted predecessor, Jonathan Akeroyd, in July, said the company was “acting with urgency” after straying too far from its roots of “timeless core collections” and outerwear, including trench coats and scarves with its distinctive Burberry check.
The new boss said he had used his first 90 days in post to start a cost-cutting programme aimed at trimming £40m from its cost base each year, about £25m of which will be pushed through during the 2025 financial year.
He also unveiled an outerwear campaign, It’s Always Burberry Weather, involving the roll-out of “scarf bars”, starting with its 57th Street flagship store in New York. He also appointed new managers across its marketing, product merchandising and planning divisions, as well as the Americas.
Burberry has issued two profit warnings this year. The brand has suffered amid a slowdown in demand for luxury goods, which also hit the sales of rivals including Kering, which owns brands including Gucci and Balenciaga, and Mulberry.
Schulman said the company’s previous strategy contributed to its setback. “Our 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 segment,” he said in a statement alongside Burberry’s half-year results on Thursday. “Today, we are acting with urgency to course correct, stabilise the business and position Burberry for a return to sustainable, profitable growth.”
But the company said the turnaround plan would take time to bear fruit. “In the short term, with our all-important festive trading period ahead and an uncertain macroeconomic environment, it is too early to determine whether our second-half results will fully offset the first-half adjusted operating loss,” Burberry’s statement said.
The brand swung to a £41m loss over the six months to the end of September compared with an adjusted operating profit of £223m during the same period a year earlier. Revenues fell 22% over the period, to just under £1.1bn.
Schulman said: “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.
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“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.”
Burberry shares rose 13% on Thursday morning after the cost-cutting plans was announced, making the luxury retailer the top riser on the FTSE 250.