LONDON — Since he joined as chief executive officer in July, Joshua Schulman hasn’t wasted a minute in his effort to turn around Burberry, which has been hit by a double whammy of slowing luxury demand and past strategies that drove the brand into territory that was too niche, too fashion and too expensive.
In an address to financial analysts following the first-half results, Schulman talked about his work so far and, in doing so, offered up a potential master class in how to revive a heritage brand.
He laid out his strategy to restore sales and profit growth; talked about joining the dots between the creative, merchandise and marketing teams, and revealed plans to speak to a wider base of customers, especially those left in the cold by Burberry’s failed, high-fashion moves.
There is a long way to go. Hours before Schulman addressed the analysts, Burberry reported a 22 percent decline in first-half revenue to 1.09 billion pounds, and a reported operating loss of 53 million pounds for the six months to Sept. 28.
Comparable store sales were down 20 percent with double-digit declines across all regions. The company reported an adjusted operating loss of 41 million pounds, compared with a profit of 223 million pounds in the corresponding period last year.
Schulman said Burberry is “acting with urgency to course correct, stabilize the business and position Burberry for a return to sustainable, profitable growth.” He said he has no doubt that Burberry’s “best days are ahead.”
His medium-term goal is to restore the company to its golden days of 3 billion pounds in annual revenue, with operating margin in the high teens. Once he achieves that goal, Schulman wants sales — and profitability — to go far beyond those numbers.
Burberry’s newly refurbished East 57th Street store.
He laid out his strategy with confidence and enthusiasm during the analyst meeting, and later in an interview with WWD.
Schulman argued that over the past several years, Burberry moved “too far from our core with disappointing results.”
So many mistakes were made. The focus, he said, was on being “modern at the expense of celebrating our heritage. We introduced new brand codes and signifiers that were unfamiliar to our customers. Our product was weighted to seasonal fashion with a niche aesthetic obscuring our more timeless core collections.”
Schulman added that as Burberry pursued brand elevation, “our pricing, particularly in leather goods, did not always align with our category authority. Consequently, Burberry’s offer was skewed to a narrow base of luxury customers.”
Not any more. Schulman believes Burberry “has the most opportunity where we have the most authenticity,” and wants to “pivot to a more recognizable and timeless expression” of the brand.
Going forward, Schulman will focus increasingly on the merchandise and the consumer.
His plan is to stock shop floors and ad campaigns with hero products, install “scarf bars” and “trench destinations” in the stores; go big on gabardine, the brand’s signature weatherproof fabric patented by Thomas Burberry in 1888, and make the brand recognizable once again to its core customers, who never stopped loving the check.
Joshua Schulman refers to the Burberry scarf as a “superpower.”
Schulman, a merchant to his core who has managed myriad companies ranging from Jimmy Choo to Bergdorf Goodman to Coach, believes scarves are a Burberry “superpower” and wants them merchandised like sweets in a candy store, rather than in glass cases.
He’s also put mannequins back on the shop floor, and plans to start cross-merchandising products such as scarves, capes, hats and gloves. He’s looking beyond the trench and putting a fresh focus on Burberry’s outerwear, with plans to offer jackets, coats and puffers for every kind of temperature and weather.
He wants to add authenticity and warmth to the ad campaigns, and showed a video from the latest holiday one at the analyst meeting. “Who doesn’t love puppies and babies?” Schulman asked after a series of jolly holiday-makers flashed up on the screen.
Schulman is determined to keep Burberry’s high-end positioning rather than pivot to “accessible” luxury. His plan is to broaden the price points; leverage Burberry’s pricing power in key categories such as outerwear, and keep leather bags, where the brand has less authority, hovering under 2,000 euros.
“It’s very clear what needs to be done. The customer loves Burberry, and there is pent-up demand” for the brand to just be itself, Schulman said in an interview at his office overlooking the treetops of Westminster. “And we need to love the customers we have as much as the customers we want.”
Schulman insisted that big luxury businesses cannot exist on “small niches of customers alone. They need to speak to a broad spectrum of luxury customers. At their best, those brands allow different customer types to find themselves, and express themselves, in the brand.”
While much of Schulman’s focus over the past few months has been on merchandising and wooing back the core customer, he’s also been working closely with the teams, bringing Burberry’s creative and marketing talents together, and giving them a clear set of goals.
An image from the Burberry holiday campaign starring Drs. Herschel and Lilly Stoller.
“I was surprised that for a business of this scale, design was a very siloed function. I believe Daniel [Lee, Burberry’s chief creative officer] and his team were craving interaction” with the other teams such as marketing and merchandising, Schulman said.
“It’s an area where I’ve leaned in. You want the teams to work holistically in service to the brand. There is real opportunity here to evolve our ways of working,” he added.
A recent example of that cooperation is the new holiday ad campaign, which features celebrities and Burberry fans, including two longstanding Burberry customers from Nebraska, Dr. Herschel Stoller and Dr. Lilly Stoller.
Burberry’s new chief marketing officer Jonathan Kiman had spotted them in the New York store, spoke to Lee about featuring them in the campaign, and the two pitched the idea to Schulman, who said “yes” immediately.
Asked about Lee’s future at the company, Schulman described him as a “a very talented designer,” but declined to comment further. Lee, who was hired by Schulman’s predecessor Jonathan Akeroyd, said he likes working with Schulman, and hasn’t given any indication that he might leave.
“I enjoy his drive, his positivity and his way of communication. In its heyday, Burberry enjoyed American CEO leadership together with a British designer, and hopefully that’s a great synergy that we can get that on board with,” Lee said.
Schulman did say that one of the best surprises he’s had at Burberry has been the enthusiasm of the staff.
“The team loves the brand and inherently knows what the best path forward is. In many cases, a new leader might encounter resistance, but I have found that the teams are incredibly open to, and eager for, the type of change we are driving, both in the brand expression and in the way we work in the organization,” he said.
Alex Hassell and David Tennant star in the “Wrapped in Burberry” holiday campaign
Schulman is also unruffled by working in the glare of the stock market. Burberry is 100 percent quoted on the London Stock Exchange, and Schulman said it’s business as usual.
“I’ve worked for public companies, big brands that belong to groups, and ones owned by private equity. You always have a shareholder, and you always have governance. My relationship with the Burberry board is great, and they have been very supportive,” he said.
Schulman added: “As an independent company, Burberry has advantages in the market. What’s been really interesting for me is that our industry partners like the fact that we’re independent. With all of the consolidation in the industry they like working with a sizable brand that’s not part of a bigger portfolio.”
He declined to comment on recent, unsourced media reports that Burberry might be taken over by luxury rival Moncler. “We’re very focused on what we have to do here, and we try to tune the noise out. We have a lot to do, and we’re hard at work,” Schulman said.
It’s clear he’s relishing the challenges of opening a new chapter for Burberry.
Schulman said he’s been following the company for decades — since the days of Rose Marie Bravo, the CEO who put Burberry on the fashion map.
Earlier in his career, Schulman also worked with Burberry’s former chief creative officer and CEO Christopher Bailey when both men were at Gucci under Tom Ford and Domenico De Sole. It was Bravo who recruited Bailey to Burberry.
Jodie Turner-Smith, Daniel Lee and Cara Delevingne at Burberry’s New York opening.
During his days running Jimmy Choo in London, Schulman also tried to hire people away from Burberry, but he said it wasn’t easy.
“People loved the culture, and always talked about Burberry’s creative and commercial alchemy. I’ve always had an affinity for the brand and an admiration for the people and the culture. It’s still something I’m passionate about it. There are very few brands like Burberry, which are already at a certain scale, and that have unbelievable potential ahead to grow.”
