Loss-making Burberry puts focus back on trench coats in a turnaround plan

Burberry plans to reignite its appeal by leveraging its British heritage, focusing on iconic items like trench coats and scarves, and scaling back on ambitious pricing strategies for bags and shoes. This strategic change comes as the luxury brand seeks to recover from recent financial setbacks.

The turnaround plans aim to address the first-half financial loss, coupled with a £40 million cost savings program. Despite a challenging year, these announcements boosted Burberry's shares by 14%, although they remain down over 40% in 2024.

A key element of the strategy involves refining brand identity to emphasize timeless British luxury, while recent marketing campaigns have highlighted outerwear and involved British celebrities. Burberry's past has seen attempts to overhaul brand codes, leading to confusion among its customer base.

The company plans to offer more affordable 'entry-level' products. Although previous price increases impacted many products, the brand finds it holds strong pricing power in outerwear, while handbags need more strategic pricing. Opportunities identified in handbags under €2,000 suggest a 'sweet spot' around €1,600.

The luxury brand remains committed to its high-end appeal without transitioning to an 'accessible' luxury image. Despite challenges with leather goods and shoes, outerwear continues to perform well, reinforcing the focus on traditional strengths.

Burberry has also been highlighted as a potential takeover candidate. Ongoing market rumors about acquisition interest from other luxury brands have influenced its stock performance, but the firm maintains that its independence enhances its market position.