Burberry Spent £700M Climbing the Luxury Ladder. It Still Had One Foot in the Outlet Mall.
Burberry poured £700M+ over seven years into becoming a true luxury house. Over that period, sales grew roughly 9%. Meanwhile, over the past decade, LVMH's shares rose nearly 400%. The reason wasn't the price hikes — it was the 30% of revenue still coming from off-price outlet stores it never dared to fix.
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In the boutique, the trench coat sits under museum lighting, the price tag climbing every season toward the rarefied air of Europe's great houses. Drive twenty minutes to the outlet mall and the same heritage check is on a rack, marked down, jostling for attention. For seven years Burberry tried to live in both places at once — and the contradiction was always going to send a bill. It arrived in 2024: revenue down 15% to £2.461 billion, the dividend suspended, and the company admitting in its own annual report that it had 'moved too far, too fast.'1
The easy story is that a CEO got greedy with prices and the customers walked. That story is wrong on almost every count. The elevation push wasn't one person's gamble, the prices weren't the real problem, and the failure wasn't a surprise. It was a structural fault line that three successive leaders papered over rather than fixed.
A seven-year bet, not a single bad call
The plan to turn Burberry from an 'accessible' label into a true luxury player was formally launched in late 2017 by then-CEO Marco Gobbetti — add leather goods, tighten distribution, refresh the stores, charge more.5 Gobbetti hired Riccardo Tisci as chief creative officer to give the elevation a face, raised prices, and pulled distribution under tighter control.6 When Jonathan Akeroyd arrived in April 2022, he didn't invent a new direction; he inherited this one and extended it.9 So when the wheels came off in 2024, the convenient narrative made Akeroyd the villain. He was the fourth Burberry CEO in roughly a decade,6 and merely the one holding the parcel when the music stopped.
The expensive part wasn't the price — it was the outlet store down the road
Here is the contradiction nobody resolved. To be a top luxury house, scarcity has to feel real — the price in the boutique has to be the price, full stop. But according to an analysis by WSJ's Carol Ryan — cited in trade coverage at the time — Burberry's outlet and factory stores accounted for roughly 30% of revenues and as much as 60% of net profit, against a European luxury peer average of about 5% of sales and 10% of profit from those channels.7 So while the front of the house climbed the ladder, the back of the house was quietly selling a third of the brand at a discount — and earning most of the money doing it. You can raise prices in the boutique all you like. You cannot raise the meaning of the brand while a third of your goods are visibly on sale a few miles away.
| Burberry | European luxury peer average | |
|---|---|---|
| Share of revenue from outlet/off-price | ~30% | ~5% |
| Share of net profit from those channels | Up to ~60% | ~10% |
| Boutique pricing ambition | Top-house tier | Top-house tier |
| Does the model match the ambition? | No | Yes |
Raising prices is the visible move; it's almost never the binding constraint. The binding constraint is the structure underneath — the distribution, the discount channels, the where-the-profit-actually-comes-from. Burberry tried to buy a luxury position with £700M of store refurbishments and higher tags while leaving its single most un-luxury feature, the 30% outlet dependency, untouched. The market reads the structure, not the marketing. If the cheap door is still open, the expensive door means nothing.
The investment was real and the return was not. Since late 2017 Burberry spent more than £700 million making the brand look high-end — including costly store refurbishments — and over the same period sales rose only about 9% and operating profit only about 1%, according to WSJ analysis cited in trade coverage.7 Set that against the company it was trying to join: over the past decade Burberry's shares roughly halved while LVMH's rose nearly 400%.8 That is the gap between dressing like a luxury house and being built like one.
Wasn't this just bad timing in a soft luxury market?
The fair objection is that the entire luxury sector cooled, that 2024 was brutal for everyone, and that Burberry simply caught a downturn while mid-transformation. There is truth in it — underlying sales were down 21% year-on-year in the spring of 2024, and a company can't fully outrun its sector.8 But the comparison kills the excuse. LVMH faced the same weather and compounded; Burberry, with the same elevation thesis, did not. The downturn didn't cause the gap — it exposed one that had been there the whole time. And the most honest witness is Burberry itself: its FY2024/25 annual report concedes the brand expression had become 'too modern at the expense of celebrating our heritage' and that pricing was taken 'too high.'1 That is not the language of a victim of the cycle. It is a company admitting the strategy was wrong on its own terms.
“Moved too far, too fast... pricing was taken too high... too modern at the expense of celebrating our heritage.”1
Why 'Burberry Forward' is still more rebrand than repair
In November 2024 Joshua Schulman unveiled 'Burberry Forward': retreat from the experimental edge, reconnect with the brand's 'original purpose' — the coats and the scarves that built it.4 The market loved the candour; shares jumped more than 22% intraday on the announcement even as interim sales fell 20% for a second straight quarter.4 But a relief rally is not a turnaround. Going back to heritage coats addresses the brand expression Burberry says went too modern. It does not, by itself, touch the structural fault — the outlet dependency that made the luxury claim incoherent in the first place. Until that 30% is resolved in the filings, 'Forward' is a more sympathetic story, not a different machine.
Burberry's seven-year climb wasn't undone by a price tag or a single CEO. It was undone by trying to be two companies at once: a top-house brand at the front and an off-price discounter at the back, hoping the customer would only look at the boutique. The customer always looks at both. The £700M bought a more expensive lining for the same coat — and the coat was still, a third of the time, on sale at the outlet down the road. Elevation was never the gamble. Refusing to fix what made elevation impossible was.
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Sources
Where this comes from — the filings, records, and reporting behind it.
- 1Burberry FY2024/25 revenue was £2,461 million, a reduction of 15% at constant exchange rates; dividend was suspended in July 2024; the company's own report states it 'moved too far, too fast,' took pricing 'too high,' and brand expression was 'too modern at the expense of celebrating our heritage.'
- 2Burberry FY2023/24 pre-tax profit fell 40% to £383M; net profit fell 45% to £270M; full-year revenue fell 4% to £2.97 billion; adjusted operating profit fell 34%; same-store sales fell 12% in Q4.
- 3Jonathan Akeroyd left Burberry with immediate effect by mutual agreement on July 15, 2024; Joshua Schulman was appointed CEO starting July 17, 2024; Q1 FY2025 retail revenue fell 22% year-on-year to £458M; dividend payments were suspended for FY2025.
- 4The 'Burberry Forward' strategic overhaul was announced November 14, 2024; it intends to reconnect the brand with its 'original purpose' focusing on staple coats and scarves; shares jumped over 22% intraday on the announcement, their biggest-ever intraday gain; interim results showed sales falling 20% for the second consecutive quarter.
- 5The upmarket elevation strategy was formally announced by CEO Marco Gobbetti in late 2017, with the stated goal of elevating Burberry from an 'accessible' label into a true luxury player competing with Europe's top houses — including adding leather goods, tightening distribution, and refreshing stores.
- 6Under Marco Gobbetti (2017–2021), Burberry hired Riccardo Tisci as Chief Creative Officer to elevate the brand; Gobbetti raised prices and tightened distribution control; Schulman is Burberry's fourth CEO in approximately ten years.
- 7Since late 2017, Burberry spent more than £700 million (~$911M) on investments to make the brand appear more high-end, including expensive store refurbishments; over the same period sales and operating profit were only 9% and 1% higher respectively; Burberry's outlet/factory stores accounted for approximately 30% of revenues and up to 60% of net profit, vs. a European luxury peer average of ~5% of sales and ~10% of profit from such channels.
- 8Burberry shares have halved in value over the past decade while LVMH shares rose nearly 400% in the same period; underlying sales were down 21% year-on-year in the 13 weeks to end June 2024; Burberry scrapped its dividend and warned of an operating loss in H1 FY2025.
- 9Jonathan Akeroyd joined Burberry as CEO in April 2022, succeeding Marco Gobbetti, and served until July 2024