Luxury fashion house Burberry Group rallied over 22% Thursday (Friday AEDT) hitting an all-time high, after unveiling a turnaround plan, including in-store “scarf bars”, to lure back customers and drive sales.
The iconic British brand said its strategic overhaul “Burberry Forward” will make its classic products the focus, with trench coats, scarves, quilted coats and new ranges of puffer jackets. The company will also rethink its lofty price tags on bags and shoes, and shift away from new fashions and leather products.
Shares surged over 22% on the news, posting the stock’s biggest-ever intraday gain. The stock closed the session 18.7% higher but year-to-date shares are down around 39%.
Leather products had been the brand’s focus for the last two years since Daniel Lee was appointed creative director. However, new chief executive Joshua Schulman, who joined in July from Michael Kors, said the new strategy will return to core strengths, with heritage designs and statement pieces, while acknowledging that price increases had gone too far.
The brand, best known for its trench coats, has been underperforming in recent years which Schulman claims inconsistent brand execution, a lack of focus on the core outerwear category and core customer segments are to blame.
“Today, we are acting with urgency to course correct, stabilise the business and position Burberry for a return to sustainable, profitable growth.” Schulman said in a media statement.
“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.”
The strategy update was announced alongside Burberry’s 2024 interim results, which saw sales fall 20% for the second consecutive quarter.
Burberry’s underwhelming performance comes amid a wider slowdown in the luxury sector, with the personal luxury goods market forecast to contract 2% this year.
At 9:07 am (AEDT) (10:07 pm GMT) Burberry Group (LSE:BRBY) shares were trading at £868, up 18.7%, after trading between £768.8 and £899.4, capitalising the company at £2.61 billion (A$5.12 billion).