It’ll take more than a quarter to get the ship back on course but Burberry LON:BRBY definitely shows promise. It’s still early doors for Joshua Schulman’s ‘Burberry Forward’ initiative but getting back to basics is showing green shoots of progress, with a nod to H2 results hopefully being able to offset H1 losses.
November’s update was a call to arms and said all the right things about a return to ‘timeless British luxury’, leading with outwear, making fewer, bigger investments and reviving a high-performing culture.
Rebuilding the brand in a tough market will be a slog but a very necessary one, given how much BRBY is lagging its luxury peers. It does look like the point of maximum pessimism is behind it though and getting back to what it’s known for certainly chimed with investors in the final stretch of 2024.
Takeover talk: Could someone make a bid for Burberry?
Dropping out of the FTSE 100 amid a 15-year low for the stock, will naturally have attracted takeover talk but that’s gone quiet recently. If a bid does come in, from Moncler or otherwise, it’s likely to be either on the back of evidence that the latest strategy refresh is working and the stock doesn’t yet reflect that, or on proof that it’s a disaster and a buyer could swoop in and fix it themselves.
“An opportunistic deal will look less attractive the more Burberry’s strategy, and share price, show sustained promise,” said Dan Lane, UK stocks analyst with broker Robinhood. “If something is brewing, it’s likely to be more thoughtful than it would have been during September lows and means now is likely the time a buyer needs to come out of the woodwork, before it’s too late and the turnaround really starts to motor.”
There is ongoing speculation that Burberry may be a target of Italian fashion brand Moncler. However sector specialists don’t think this makes sense. The two brands have distinct identities — Moncler is casual and Italian, while Burberry is formal and British. Fashion watchers 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.
We commissioned some 12 month momentum analysis from specialist Trend Intelligence, using their proprietary indicators. All four indicators demonstrate strong positive signals. Trend says it sees a strong positive trend for the stock price. If anyone is thinking of putting in a bid for Burberry, they will need to act soon. Speculation on a deal is obviously leading to some buying activity in the market.
Burberry’s strategy is unclear about its target audience
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. The recent overhaul removed these accessible items and hiked prices by up to 30-40%, 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.
Burberry’s new artistic direction struggles to appeal to either minimalist luxury clientele or logo-driven new money customers, leaving its target audience unclear.
“Daniel Lee’s work has been praised for its creativity, particularly his focus on expanding Burberry’s leather goods,” observed Yanmei Tang, a retail sector analysis at independent stock research house Third Bridge. “However, there’s room to make offerings more feminine and functional to appeal to a broader customer base.”
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.
