Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Oliver Chen:
Thank you for listening in to this TD Cowen Insights podcast episode. We're recording live here at our 9th Annual Future of the Consumer Conference in New York City. My name is Oliver Chen. I'm TD Cowen's retail, new platforms and luxury analyst.
I have the privilege of chatting with Josh Schulman. He's a dear friend and a leader and visionary in the business, the CEO of Burberry. He was appointed the CEO position in July 2024, and he is been the CEO of several American fashion brands, including Michael Kors and Coach. He's already leading a lot of awesome change with Burberry. A lot of excitement here too. Josh, we'll kick it off with the Burberry Forward strategy. You launched this in November. You've reported better results. What are the core pillars here?
Joshua Schulman:
Yeah, Burberry Forward first. Thanks, Oliver. Thank you for having me. Burberry Forward is our plan to reconnect with our core customers, to refocus on our core categories and drive value creation. There are four pillars around Burberry Forward. The first is on brand. In the recent past, we moved in a very modern direction, modern British luxury, which wasn't as distinguishable from other luxury brands, and so we're refocusing on timeless British luxury, which is the juxtaposition of modern and heritage.
So you will see in our advertising and our marketing campaigns, you will see a more recognizable mix of London-based signifiers, like Big Ben, with the British countryside rather than a lot of interior shots that may be more indistinguishable. And you'll see that in our environments and in our storytelling and in our product.
In terms of product, our second pillar is around leading with outerwear and scarves and earning authority in other categories. In the recent past, even though we were founded as an outerwear brand with the original purpose to protect people from the weather, we had been putting handbags first in terms of the storytelling and in terms of the placement in stores and in the center of our story. And it's actually outerwear and scarves where we have the most product authority. So we continue to dress people head to toe. We continue to have handbags and shoes and wonderful ready-to-wear for all occasions, but by putting outerwear and scarves at the center of our story, that helps distinguish us from all of the other brands.
Our third pillar is about our distribution, and there we're looking for prominence, productivity and profitability. We have great locations around the world, and so we have the prominence and now we're looking at what's happening in those locations in terms of enhancing the visual merchandising, a richer, more styled approach. A year ago when I arrived, our stores didn't have mannequins. They were very spare and very modern, and now we're bringing back mannequins. We're bringing back a richer, more product-focused visual merchandising in stores to help our customers wardrobe better, and frankly, drive our units per transaction. Online too we had a very spare user interface UX, and now we're bringing in more commerciality and more function and convenience and styling inspiration for our customers online as well. And so we see all of these initiatives driving productivity, both of our stores and our online channels, and that productivity will help us drive greater profitability.
And finally, probably the underpin to everything we're doing in Burberry Forward is around our culture. Burberry was famous for having an amazing culture that combined a high focus on creative with commercial. And so that creative and commercial alchemy that Burberry really invented in the luxury space was a little bit dormant. And so bringing that back in the company is the pillar, really, that underpins all of Burberry Forward.
Oliver Chen:
Josh, related to that, what are your brand codes that you're featuring and how might you juxtapose brand codes with timelessness?
Joshua Schulman:
Yeah. Our most identifiable brand codes are our trench and our Burberry check. And at various iterations of our past, we've either been more or less proud to talk about them, and I see them as enormous gifts that we have, these two icons that are instantly recognizable as Burberry. It's funny because several months ago I was at the NRF conference with Pete Nordstrom, and I was backstage with the woman who runs our marketing in North America. And I said, "Last night I saw on my phone A$AP Rocky in a Burberry scarf. He looked amazing. How much did we pay for that placement?" And she said, "We didn't pay for the placement. He was in our store before Christmas and was buying a lot of Christmas gifts and bought that for himself." And I'm like, "Well, that picture is everywhere."
And I thought about it because he was wearing our most classic item, a Burberry check scarf in the original color, the original check. And I thought to myself, this is one of the most talented people at the pinnacle of popular culture who probably gets clothes and accessories gifted to him all day long every day. And he chose to purchase... It's not just that he chose to purchase Burberry, but he chose to purchase our original icon. And one of the coolest people in the world is wearing what sometimes people in the company may have gone, "Ah, that's our old conservative scarf." But those brand codes are super powerful, and watching the affinity for them that endures after 170 years is really gratifying.
Oliver Chen:
Josh, I'm wearing the Magnet Kensington, and it has a great modern cut. You have a rich history in rainwear, and you've sold this iconic trench since World War I. What are you most excited about? How should we see trench as a percentage of total evolve over time perhaps?
Joshua Schulman:
Yeah, we don't disclose the specificity of one style, but outerwear in general is growing over time. And I think one of the things that we've been really excited about in this last year is to see the resilience of the outerwear and the soft category, including scarves, the resilience, even as we were changing things in the brand, even as we had some customers go away in the past few years. Those categories were really resilient. And that's been the cornerstone of our storytelling. And we launched our It's Always Burberry Weather campaigns last October. Immediately, we saw a further inflection in our outerwear and scarf businesses, which has given us confidence now that Burberry Forward is the right path forward for us.
Oliver Chen:
Josh, what about pricing? Luxury brands have historically been able to raise, but prices got really steep, and also you throw in tariffs. There's a lot of volatility in what companies are choosing to do. How are you approaching pricing?
Joshua Schulman:
For us, like everyone, we probably took pricing a bit too far across the board, and we came up with a strategy very early on last year where we said, "We're going to align our pricing with our category authority." So we know in a category like outerwear, we have to have a sharp opening price. We have to have a sharp better price point, but we also have room to stretch the price pyramid. And so I'm super excited about uber-lux iterations of the scarf and of outerwear in cashmere and leather and suede. At the top of the pyramid, we've been testing and learning with some leather and suede trenches at around 10,000 US dollars. No price resistance if the product is right, and because we are the natural authority there. But in other categories, we do need to be more mindful. And for the broad customer base, the broad luxury customer base, we have to have entry points into the brand.
In terms of tariffs, in some ways, we had been preparing for this all year because we have been really studying where we have pricing power and where we don't. We didn't know the enormity of the tariffs, and frankly we still don't, but we felt confident where we took some mid-single-digit price increases. We felt confident that where we did that surgically, that would be okay. And keep in mind that the US is only 19% of our business. So this is really a US-centric story, and 81% of our business is unaffected by this tariff story.
Oliver Chen:
We're at the future of the consumer conference. If you had to bet on one consumer behavior shift that will define the next five years, what are you spotting here?
Joshua Schulman:
I think the consumer is leaning into brands and experiences that are authentic, so they're going to the brands and to the experiences that define a category. So that is really great for us. Our original purpose is to protect people from the weather. And so as people come to us for outerwear and scarves and we reinforce that with storytelling that taps into both an emotional and a functional aspect, we are really optimistic that what we are doing is aligning with where the consumer is going.
Oliver Chen:
Josh, you've also been a very authentic leader across many iconic brands and retailers. How has your perspective and methodology about being a leader changed over time?
Joshua Schulman:
Oh, wow. That's a big question. I've had really incredible mentors from people like Marc Jacobs and Robert Duffy to Domenico De Sole, Tom Ford, Mark Lee, Karen Katz, Victor Luis. I have worked with extraordinary people in the industry. And I think as you start out, you sort of look at your mentors, and you might adapt certain things from your mentors, but then it kind of becomes a mosaic in your own leadership style. And what's great about Burberry is there is this culture of creative and commercial alchemy, which is something that I've always admired. And it may have been a little dormant at Burberry these past few years, but I had been observing Burberry for decades, since Rose Marie Bravo came over in the '90s, and my colleague at Gucci was Christopher Bailey. And so I watched what he did at Burberry together with Rose Marie and together with Angela, and it was extraordinary. And it's really a privilege to lead such a talented group of people and work together with them to unlock the potential that this brand has for today's luxury consumer.
Oliver Chen:
And part of what I believe in our views at TD Cowen and my views for the industry is that inclusivity matters for innovation and also talent and stakeholders. What are your thoughts on embracing that to drive magic and logic of the organization?
Joshua Schulman:
Yeah. No one person can do it alone, and we're a global brand, and it's incredibly important to reflect the customer around the world. And so whether that's the leadership team in headquarters or whether that's the leadership teams in each of the region, or frankly speaking, where you really see it is when you go do store visits and you see the composition of the teams. Because at Burberry, we are addressing a broad luxury consumer. And so we have five customer archetypes, and within those archetypes, you have great diversity. As you address a diverse audience, you want your workforce to understand and reflect the diversity of your customers.
Oliver Chen:
Yeah, being very customer-centric and thoughtful about that. Final question, Josh, which part of the job is the most fun for you?
Joshua Schulman:
I love being in the stores. I love being in the warehouses. I love waking up and seeing the flash on a good day, and when it's not so good, and then figuring out what to do about it.
Oliver Chen:
Yeah. Well, you're a great example and leader of both magic and logic, so thanks for all the inspiration, and the momentum has been amazing to watch. Thank you, Josh.
Joshua Schulman:
Thank you, Oliver.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.
