- Burberry Group
- 27 May 2025 10:19:21
Source: Sharecast
Barclays said it was updating its estimates following the reporting season and upgrading the name for two main reasons.
Firstly, the bank said it thinks the company’s high-end brand positioning is no longer at risk.
Barclays turned ‘underweight’ on Burberry last year as it was worried that the lack of a disciplined full-price strategy, the markdown initiatives, high exposure to outlets and potential change of strategy from the new management could put the brand's high-end luxury positioning at risk.
However, it noted that over the past few months, these risks don't appear to have materialised.
"The markdowns activity that took place in November 2024 didn't seem to dilute the brand image. The new brand strategy focusing on Burberry's core offering (outerwear/ scarves) is more in line with the brand's DNA and the most recent marketing campaigns and fashion shows seem to be having better tractions as flagged during the May-25 conference call (the brand has reached its higher level of brand desirability and brand affinity in the past three years - Kantar metrics)," it said.
"Even if it is still early to gauge whether the new products will translate into a success when they reach the stores in calendar H2, we think that navigating a phase of markdowns without damaging the brand equity is already a positive."
Secondly, Barclays said that after turning loss-making in H1-25 at the EBIT level, the brand returned to profit in H2-25 and should see further EBIT improvement in FY-26.
"The higher amount of cost savings announced should also provide some cushion in the event of additional macro headwinds," Barclays said.
"We keep in mind, however, that the brand transformation remains at an early stage and that top-line growth could remain negative in the short-term."
At 1015 BST, the shares were up 2.9% at 990p.
