Investors breathed a sigh of relief this morning after Burberry’s first set of results after implementing its turnaround plan showed it was heading in the right direction. Burberry’s share price rose more than 13 per cent in early trades. In the past six months the share price has risen more than 71 per cent – a welcome turn after a steady collapse in its value in 2023 and early 2024.
Investors shunned the stock after sales and profit plummeted amid a loss of brand identity . High prices, raised during the pandemic-era luxury boom, didn’t sit well with aspirational consumers, nor did a foray into the ultra-competitive leather market. But an ambitious plan from new chief executive Joshua Schulman aimed to rescue the brand from the trenches by taking the brand back to its roots and focusing on basics.
This morning’s results were the first set since the plan was implemented, and showed early signs of success. Sales fell four per cent, far better than analysts’ predictions of a 12 per cent drop. “The strategy reset seems to be the right move,” Aarin Chiekrie, equity analyst, Hargreaves Lansdown , said.
“There is some momentum building,” Richard Hunter, head of markets at Interactive Investor, agreed. “It is possible that a line in the sand has been drawn.” But analysts are unlikely to upgrade their expectations yet.
Investors “will take some convincing” Hunter said, and need more evidence “that the group can escape from its recently chequered past.�.
