Investors are eagerly awaiting Burberry’s upcoming sales report for the crucial holiday season, anticipating signs of progress in its ongoing turnaround efforts under CEO Joshua Schulman. The luxury brand, which has faced challenges in a difficult market, will aim to showcase improvement as Schulman focuses on revitalizing Burberry’s iconic products, like its signature trench coats, and regaining lost market share.
Since Schulman took over as CEO six months ago, Burberry shares have surged by more than 70%, following a dramatic drop to a 15-year low in early September. This uptick reflects investor optimism that the worst is behind the brand and that Schulman is positioned to drive sales growth.
Analysts are forecasting a 12% decline in comparable sales for the quarter ending December, based on a company-compiled consensus estimate. This marks an improvement over the 20% drop reported for the six months ending September.
U.S. Focus Key to Recovery
A critical piece of Burberry’s strategy lies in enhancing its presence in the U.S. market, where Schulman sees untapped potential. In a November update to investors, he emphasized a significant focus on America, where Burberry has yet to make substantial inroads. Analysts believe that U.S. shoppers could play a pivotal role in Burberry’s recovery if the brand can strengthen its visibility and appeal.
Burberry’s pricing strategy reflects a bet on stronger demand from U.S. consumers. Data from Luxurynsight reveals that Burberry increased its highest price point by 115% in the U.S. in the year leading up to November 2024, a much larger increase than in markets like Italy and China.
Anna Farmbrough, a portfolio manager at Ninety One, noted that Schulman, an American, is highly enthusiastic about Burberry’s opportunities in the U.S. Given his past leadership at Coach, where he cultivated strong relationships with department stores, he is well-positioned to elevate Burberry’s profile in the region. “Burberry has never cracked the U.S.,” Farmbrough said. “If they can improve their perception there, it’s a major opportunity.”
Luxury brands across the board are banking on the U.S. market, as affluent consumers are expected to spend more on high-end fashion and luxury goods, fueled by tax cuts and a booming stock market.
Return to Core Products
Burberry’s latest advertising campaigns have shifted focus back to its classic trench coats and scarves, veering away from bags and shoes in an effort to reconnect with customers who may have been alienated by previous designs and higher prices. Schulman has made it clear that the brand’s turnaround will prioritize its iconic products, a move analysts see as both a return to Burberry’s roots and a necessary strategy in an increasingly competitive luxury market.
Thomas Chauvet, an analyst at Citi, praised the plan, noting that it provides Burberry time to rebuild without placing undue pressure on short-term financial targets. He described the strategy as a balanced approach, grounded in the brand’s heritage while also looking ahead to future growth.
Trenches and scarves currently account for around 35% to 40% of Burberry’s sales and have historically offered higher profitability compared to other categories, according to Chauvet.
Revenue Goals and Challenges
Burberry’s immediate goal is to return to an annual revenue of £3 billion ($3.7 billion), a level it last reached in its 2022-2023 fiscal year. However, analysts predict that the brand’s sales for the fiscal year ending March 2025 will fall short, expected to reach £2.39 billion.
Despite concerns over a major sale held on its website late last year, which raised questions among investors, Farmbrough believes it was merely a strategy to clear old inventory and is unlikely to impact full-price sales of new collections.
As Burberry navigates its turnaround, all eyes are on how the brand will leverage its U.S. strategy and refocus on its iconic products to boost sales and restore investor confidence.
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