Burberry Targets Sales Recovery Amid Luxury Market Challenges

London, United Kingdom - Investors anticipate positive signs of progress in Burberry's turnaround as the luxury brand prepares to release sales figures for the critical festive season on Friday.

CEO Joshua Schulman, appointed six months ago, has pledged to revitalize the brand and reclaim market share. Amidst a floundering luxury sector, his strategy centers on iconic products such as trench coats.

Since September, Burberry's shares have surged over 70%, reflecting investor optimism that pessimism has subsided and Schulman will reinvigorate sales. Analysts predict a 12% comparable sales decline for the quarter ending December, an improvement from the 20% drop reported in the previous six-month period.

Targeting the American Market

U.S. consumers hold potential catalyst power for Burberry. Schulman has hinted at plans to enhance the brand's presence in the region, recognizing a "lot of focus on America" where it has maintained low visibility.

Burberry's pricing strategy aligns with expectations of increased demand in the U.S. The brand has implemented a substantial 115% increase in its highest price point in the U.S. over the past year.

Anna Farmbrough, a portfolio manager at Ninety One, believes Schulman's American origins and connections with department stores from his leadership role at Coach will bolster Burberry's presence in the market.

Return to Heritage and Iconic Products

Recent advertising campaigns have emphasized Burberry's signature trench coats and scarves rather than bags and shoes, aiming to reconnect with customers alienated by unfamiliar designs and elevated prices.

Schulman's avoidance of specific financial targets provides flexibility for the company to rebuild without risking investor disappointment. Analyst Thomas Chauvet endorses the turnaround plan, recognizing its focus on fundamentals and brand DNA while embracing future trends.

Trench coats and scarves constitute a substantial 35-40% of sales and historically deliver higher profitability. Burberry's immediate goal is to regain £3 billion in annual revenue, a figure last achieved in 2022-2023. Analysts anticipate a gradual return, with sales estimated to reach £2.39 billion by March 2025.