By Helen Reid LONDON (Reuters) -Burberry's turnaround drive, which has tapped Oscar winner Olivia Colman and Oasis frontman Liam Gallagher to champion its British heritage and classic trench coats,
Burberry's London Fashion Week Showcase Aims to Revitalize Brand
Burberry's Brand Revival Strategy
By Helen Reid
Marketing Overhaul
LONDON (Reuters) -Burberry's turnaround drive, which has tapped Oscar winner Olivia Colman and Oasis frontman Liam Gallagher to champion its British heritage and classic trench coats, faces a fresh test on Monday when it unveils its latest designs at London Fashion Week.
Celebrity Influence
CEO Joshua Schulman, an American, has overhauled Burberry's marketing to try to broadcast a version of Britishness that shoppers around the world can relate to, having criticised his predecessor's product and pricing decisions, saying some designs had a "niche aesthetic" and were not recognisable as Burberry.
Sales Performance
"It felt very high fashion and quite edgy, and the collections that you're seeing now are very classic, very clear heritage designs," said Anna Farmbrough, portfolio manager at Ninety One, which holds Burberry shares.
Future Growth Expectations
FIRST LADY ARRIVES IN BRITAIN WEARING BURBERRY
Creative director Daniel Lee's role has changed since Schulman took over in July last year, with the CEO linking design more closely to commercial teams, and speculation has swirled over how long Lee, appointed in September 2022, will remain in the role.
"Josh has normalised the relationship between a chief executive and a creative director," said Jeremy Smith, UK equities portfolio manager at Columbia Threadneedle in London.
"It's obviously important to Burberry who their creative director is, but it shouldn't define the business."
Burberry under Schulman has rolled out social media campaigns featuring celebrities strongly associated with Britishness, like Colman, who starred as Queen Elizabeth II in Netflix series The Crown, and riffing off cultural moments like the Glastonbury music festival.
The brand has also made its way to the biggest political stage - when Air Force One touched down in London on Tuesday night for U.S. President Donald Trump's state visit to the UK, Melania Trump exited the plane wearing a Burberry trench coat.
"Burberry's use of social media has been very, very clever and it's very powerful because it can change perceptions quite quickly and achieve quite broad penetration, whereas product positioning in the luxury world takes a long time to change the way people think," Smith said.
SALES EXPECTED TO RETURN TO GROWTH
Burberry's shares have gained 50% since Schulman took over as investors welcomed changes including a 20% cut to the workforce, but the real test of the turnaround comes in the autumn and winter months during which the brand makes most of its revenue.
While Burberry's like-for-like sales growth has been negative for the last seven quarters, the latest result was down just 1% year-on-year, and analysts expect sales to return to growth this quarter as the turnaround starts to bear fruit.
"You would hope that they would be able to get back to where they were historically, in terms of sales - and I think they have a very good chance, under Josh, of growing beyond that," said Ninety One's Farmbrough.
(Reporting by Helen ReidEditing by Mark Potter)
