Burberry shares hit intraday high as overhaul strategy marks turning point

London — burberry aims to win back shoppers and tamp down sales by refocusing on traditional designs and statement items under a radical renewal plan designed to revive the luxury fashion brand’s flagging fortunes. We aim to push it up.

The strategic overhaul of Burberry Forward, announced on Thursday, reconnects the brand with its Purpose, with a focus on classic coats and scarves and a more disciplined approach to product selection. The company said it aims to.

The stock price soared more than 22% following the announcement, marking the biggest intraday gain ever. The stock ended the day up 18.7%. The stock price has fallen about 39% since the beginning of the year.

Analysts reacted positively to the news, pointing to a potential “tipping point” for the struggling brand.

The plans offer the first insight into Burberry’s repositioning under new CEO Joshua Schulman, who joined from Michael Kors in July and becomes the brand’s fourth CEO in the past decade.

“We are acting with urgency today to correct course, stabilize the business and position Burberry to return to sustained and profitable growth,” Schulman said in a statement.

Schulman said brands have strayed too far from their core products in recent years, alienating consumers and focusing too much on niche products rather than traditional products. He also pointed out that the brand’s “elevation strategy” has resulted in pricing, especially for leather goods, to be out of sync with its market position.

“We now have a clear framework to reignite appetite for the brand, improve performance and drive long-term value creation. Building on our strong foundations, we will continue to build on Burberry’s “I am confident that the best is yet to come,” he added.

The plan was announced at the same time as Burberry’s 2024 interim results, where sales fell 20% for the second consecutive quarter.

The poor performance comes amid a growing slowdown in the luxury sector, which is expected to contract by 2% this year. But analysts have long pointed to the company’s inherent flaws, as successive CEOs have tried and failed to revive the brand and improve its image.

RBC Capital Markets analyst Pilar Dadania said Thursday’s overhaul plan has been a long time coming and should allow the brand to hone in on what it does best.

“The focus on heritage and outerwear is something we have been waiting for strategically, as it offers more authenticity in a less competitive category,” Dadania said in a note. We believe that this is because they will give us more.”

Mamta Valecha, consumer discretionary analyst at Kilter Cheviot, described it as a “turning point in a very difficult period”.

Thomas Chauvet, Citi’s head of luxury equity research, said he expects “significant changes” to occur in product design, assortment, pricing, distribution and communications without departing from the positioning of global luxury brands. He said he expected it.

The strategic shift follows speculation that Mr Schulman may adopt a “British Coach” strategy, drawing on his former employer’s methods to target more aspirational consumers. Such methods could have included doubling down on outlets or increasing exposure to off-price retailers.

Third Bridge analyst Yang-mei Tan on Thursday welcomed the move into high-end luxury goods, but said the success of the overall strategy will depend largely on Schulman’s ability to align his vision with that of the company’s designers.

“Burberry could draw inspiration from brands like Louis Vuitton by balancing high-end, artistic collections with accessible core pieces, while keeping its British heritage at the forefront. “The success of this strategy will depend on the alignment of Mr. Schulman’s business acumen and Mr. Lee’s creative vision,” she said.

Bernstein upgraded the company’s rating to outperform late last month, saying at the time that the company appeared to be “moving in the right direction” with Schulman’s appointment. HSBC soon followed suit.