Burberry's future proof strategy should avoid a Moncler takeover, analysts say

As Burberry looks to reclaim its authority in outerwear and all-weather accessories, the British heritage brand must contend with another half year of dire results, which saw retail sales down as much as 20 percent.

The future proof strategy under CEO Joshua Shulman is to amplify the brand's strengths, like its trench coats, outerwear, and of course scarves. A new "scarf bar" was unveiled in the brand's Manhattan flagship and will evolve into a global visual merchandising roll-out to push its core products. New appointments to Burberry's marketing, product merchandising and planning teams are meant to achieve creative and commercial alchemy. However, what is at stake, of course, is revenue and sustainable growth, when sales have been falling at landslide levels.

But as Burberry seeks to "course correct its strategy and market position," recent rumours of a Moncler takeover have left analysts divided. A Moncler ownership would bring Burberry under an Italian umbrella, which some analysts see as detrimental to the business, after the company lost its way under creative director Riccardo Tisci and CEO Marco Gobbetti, both Italians, who pushed the brand into more luxury streetwear categories at the cost of its customer base that is less contemporary.

Analysts from Third Bridge said "the two brands have distinct identities—Moncler is casual and Italian, while Burberry is formal and British. They see no clear synergies between them in terms of products or target markets. Additionally, the cultural differences between the Italian and British companies could lead to a significant risk of dilution."

Traditionally viewed as an "entry-point brand in luxury, Burberry balanced high-end runway pieces with affordable items like scarves and shoes that attracted a broad clientele," Third Bridge noted. "The recent overhaul removed these accessible items and hiked prices by up to 30-40 percent, alienating a large segment of buyers while repositioning the brand as more avant-garde and elitist—an approach seen as risky in the current market climate."

Third Bridge said "Burberry's new artistic direction struggles to appeal to either minimalist luxury clientele or logo-driven new money customers, leaving its target audience unclear." However, "Daniel Lee's work has been praised for its creativity, particularly his focus on expanding Burberry's leather goods." Experts see "potential in expanding categories like footwear, but at more accessible price points, and suggest a more structured collection strategy for ready-to-wear that blends commercial appeal with Burberry's heritage."

With new CEO Joshua Schulman from Coach and Michael Kors, there's "speculation about whether Burberry might shift toward a more commercial path." However, experts feel "Burberry should avoid a straightforward 'British Coach' approach." Instead, "Burberry could take inspiration from brands like Louis Vuitton by balancing high-end, artistic collections with accessible, core items, keeping its British heritage at the forefront." The success of this strategy "will depend on alignment between Schulman's business acumen and Lee's creative vision."