Burberry's Heritage Revival Faces Key London Fashion Week Test
Burberry's strategic turnaround, spearheaded by CEO Joshua Schulman, faces a crucial moment at London Fashion Week as it unveils its latest collections. The brand has been actively working to reaffirm its British heritage, enlisting high-profile figures like Oscar winner Olivia Colman and Oasis frontman Liam Gallagher to champion its classic trench coats and iconic identity. This concerted effort marks a significant shift in direction, aiming to broaden global appeal and re-establish a clear brand presence.
Schulman, an American at the helm, has meticulously revamped Burberry's marketing approach, moving away from what he deemed his predecessor's "niche aesthetic" and products that were not instantly recognizable as Burberry. His vision is to convey a version of Britishness that resonates with a global audience, making the brand more accessible and understandable. According to Anna Farmbrough, a portfolio manager at Ninety One, which holds Burberry shares, the current collections are "very classic, very clear heritage designs," a distinct departure from the "very high fashion and quite edgy" feel of previous offerings.
The role of Creative Director Daniel Lee, appointed in September 2022, has also evolved under Schulman's leadership. The CEO has integrated design more closely with commercial teams, leading to speculation about Lee's long-term tenure. However, Jeremy Smith, UK equities portfolio manager at Columbia Threadneedle, views this as a positive development, stating that Schulman has "normalized the relationship between a chief executive and a creative director," emphasizing that while the creative director is important, they "shouldn't define the business."
A cornerstone of Burberry's renewed strategy is its powerful social media presence and strategic celebrity endorsements. The brand has launched campaigns featuring personalities strongly associated with British culture, such as Olivia Colman, known for her portrayal of Queen Elizabeth II in "The Crown," and drawing inspiration from cultural touchstones like the Glastonbury music festival. The brand even made a high-profile appearance on the global political stage when Melania Trump disembarked Air Force One in London wearing a Burberry trench coat. Smith notes that Burberry's "very, very clever and very powerful" use of social media can rapidly alter perceptions and achieve broad penetration, a stark contrast to the slow process of product positioning in the luxury sector.
Financially, the market has reacted positively to Schulman's initiatives, with Burberry's shares gaining 50% since his arrival, alongside a 20% reduction in the workforce. However, the true litmus test for the turnaround will be the autumn and winter months, periods when the brand generates the majority of its revenue. While Burberry has experienced negative like-for-like sales growth for the past seven quarters, the latest results showed a decline of just 1% year-on-year, leading analysts to anticipate a return to sales growth this quarter. Farmbrough from Ninety One expresses optimism, suggesting that under Schulman, Burberry has a strong chance not only to recover historical sales levels but also to surpass them.
