Burberry’s Makeover Is Long and Slow Five years after announcing a new look, progress at the British luxury brand is muted

By guest author Carol Ryan from the Wall Street Journal.

May 18, 2023

A model presents a creation for Burberry’s Autumn/Winter 2023 collection. Photo: niklas halle’n/Agence France-Presse/Getty Images

Reviving a fashion label that has lost its mojo doesn’t happen overnight. But half a decade in, the results of Burberry’s BRBY 3.41%increase; green up pointing triangle revamp are only middling.

Shares in the British luxury company known for its $2,000 trench coats fell 7% in early trading on Thursday. It was the last major European designer brand to report its results for the first three months of 2023, which is Burberry’s fiscal fourth quarter.

The company’s preferred metric, retail comparable-store sales, increased by an impressive-sounding 16 %. However, this strips out Burberry’s weak wholesale business, thus flattering growth, and isn’t comparable to the 17 % and 22 % rise that luxury competitors LVMH Moët Hennessy Louis Vuitton and Hermès reported respectively over the same period. Burberry’s full-year sales, which capture the entire business, increased just 5 % at constant exchange rates.

The brand’s sales are weakening in the U.S., where demand for its lower-priced products such as sneakers and menswear has slumped as inflation reduces disposable incomes. Most high-end brands are experiencing the same trend: Bank of America analysts expect U.S. luxury sales to fall by 10% in 2023.

Luckily, Burberry’s Chinese stores have begun to fill up again since Beijing lifted Covid-19 restrictions earlier this year. And new designs from Burberry’s freshly-hired creative director Daniel Lee may revive interest in the brand again. His first collection, shown in February, went down well with wholesale buyers in the fashion industry but will take months to arrive in Burberry’s stores.

That means long-suffering shareholders must wait at least until then for progress. Since Burberry’s previous management team announced a new strategy in late 2017, group sales have increased by around 10% to £3.1 billion in its latest full year. By comparison, the value of the global market for luxury goods rose 40% over that time according to estimates from consulting firm Bain & Company. Burberry has been the third-worst-performing stock across the luxury goods industry since 2018, delivering total annual shareholder returns of just 3% in dollar terms.

The London-listed brand heads into a critical phase of its revamp at a tricky time. Big luxury conglomerates like LVMH grabbed market share during the pandemic and are handily outspending smaller independent rivals on advertising and digital investments, not to mention hogging the best real estate locations for flagship stores. The risk for shareholders is that Burberry’s long-promised refresh is becoming harder to pull off.

Appeared in the May 19, 2023, print edition as ‘Burberry’s Long, Slow Makeover’.