Always in the spotlight, iconic brands are those that suffer the most reputational losses during crises, be they of any nature, precisely because of the high expectations and vigilance in relation to them. Therefore, I am very curious to know what solution shareholders, advisors and managers of the British group Burberry will find to boost its revenue, hit by the downturn in the luxury segment, and to contain the loss of the brand's value in the stock market.
“Reputation is fundamental in these more difficult and complex times, as it generates trust and directly impacts results and value creation.”
The brand known for its indefectible trench coach with checkered lining is below bad weather. It recorded a drop of more than 20% in sales in the first quarter, fired the CEO, cut dividends and investors did not forgive. The company's shares fell 16% on the London Stock Exchange on Monday, July 15, in reaction to the announcements, and have already been performing poorly since 2022. According to Bloomberg, the company's market capitalization fell from around US$ 13 billion in April last year to the current US$ 3.5 billion.
Replacing Jonathan Akeroyd was Joshua Schulman, former CEO of Michael Kors and Coach. His name would be a signal, according to analysts, that Burberry may backtrack on plans to transform into a more sophisticated brand, as Schulman comes from American companies with a more flexible customer spectrum. Hired two years ago to elevate Burberry into the luxury market, Akeroyd was unsuccessful and was let go following the company's disappointing performance. There are still a few steps needed for the British to climb and reach high-end French and Italian brands (see table); its products are lower priced and its customers tend to be younger.
Since the departure of American Angela Ahrendts in 2014, Burberry has experienced a period of transition. In her eight years of management, Angela promoted a series of disruptive changes – such as increasing the brand's presence on social media – transforming the British brand into a global luxury brand. After that, the brand maintained its shine, but the golden times were over, say industry observers.
Wrong strategies are part of the company's journey. People and organizations make mistakes. Scenarios change, evolution requires agile decisions. Therefore, reputation is fundamental in these more difficult and complex times, as it generates trust and directly impacts results and value creation. In the case of the almost 170-year-old brand, it is time to open the reputational umbrella to mitigate management or strategy problems.
The beginning
In 1856, at the age of 21, bothered by the lack of clothing capable of protecting people from the unstable English climate, Thomas Burberry invented the trench coat, a breathable fabric that marked the before and after of raincoats.
First, the coat won over Norwegian polar explorer, zoologist and Nobel Peace Prize winner Fridtjof Nansen, and then it was chosen by other adventurers. During the First World War, the company created the famous trench coach. Then, in the 1920s, its checkered print received trademark registration for raincoats.
THE MOST POWERFUL LUXURY DESIGNS
Ranking by brand value*
- Louis Vuitton US$ 129.8 billion
- Hermès US$ 93.7 billion
- Chanel US$ 60.1 billion
- Gucci US$ 23.8 billion
- Dior US$ 12 billion
- Cartier US$ 10.5 billion
- Rolex US$ 9.1 billion
- YSL US$ 6.5 billion
- Tiffany & Co US$ 6.2 billion
- Prada US$ 5.1 billion
Source: The classification above is an excerpt from the Kantar BrandZ Top 100 2024 ranking, which lists brands from different segments in 54 markets. The annual survey evaluates and quantifies the value and financial performance of international companies
Christianne Schmitt is editor of the Reputation Feed
christianne.schmitt@ankreputation.com.br
Signed articles reflect the opinion of the authors.
