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Burberry Thursday outlined a new strategy that will focus on scarves and the outerwear such as trenchcoats it is known for as the British luxury group reels from a sharp quarterly loss.
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The strategy shift drove Burberry shares up as much as 17% in London trading though the stock remains 40% lower this year.
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The luxury firm, like the rest of the industry, has been grappling with slowing demand from
Burberry (BURBY) on Thursday outlined a new strategy that will focus on scarves and the outerwear such as trenchcoats it is known for as the British luxury group reels from a sharp quarterly loss.
The strategy shift drove Burberry shares up as much as 17% in London trading, though the stock remains 40% lower this year.
The luxury firm, like the rest of the industry, been grappling with slowing demand from Chinese consumers, who have been watching their spending amid a prolonged real estate slump. Chinese consumers have driven the growth of the luxury market in recent years, and brands like Burberry had massively expanded in the country to take advantage of their appetite for designer goods.
Burberry had expanded its focus to areas like handbags and other accessories in recent years, while also failing to win over consumers as it tried to go upmarket and increase prices.
Recently appointed Chief Executive Officer (CEO) Joshua Schulman, an American national who previously ran Michael Kors and Coach, said moves by the “quintessentially British” brand outside its strengths of “core outerwear” had been partly to blame for its problems.
CEO Schulman Says Strategy Aimed at Getting Back to Profits
“Today, we are acting with urgency to course correct, stabilize the business and position Burberry for a return to sustainable, profitable growth,” Schulman said in a 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,” he added.
Burberry swung to a first-half loss of GBP53 million ($67.07 million) from a profit of GBP223 million the same period last year, while revenue for the six months to Sept. 28 fell 22% year-over-year to GBP1.09 billion, a 20% slump on a constant-currency basis.
Despite Thursday's jump, its stock remains down 40% this year.