If after Richemont’s good quarterly report we titled “rejoicing”, now we have to say that joys are doubling. Because Burberry too recorded a performance that was by no means splendid, but better than expected. The drop in sales in the last quarter of 2024 was a third of what analysts had expected: -4% compared to -12%. By virtue of the result, the British brand’s share price jumped more than 13% at the opening of trading on 24 January, last Friday. Burberry CEO Joshua Schulman, meanwhile, preaches caution.
Joys to double
This time Burberry’s minus sign has a different flavour. In the quarter ending 28 December 2024, comparable shop sales fell by 4%, compared to an expected decline of 12%. A result boosted by a brighter Christmas season in the US. “We view these results as a first (and early) step in the right direction”, RBC analysts said in a note picked up by Reuters. While Joshua Schulman, CEO of the British brand, commented: “We are still at the beginning of our transformation, and there is still much to be done”.
It was Schulman himself who dictated the reversal of Burberry’s strategy, which is now focusing on iconic products such as trench coats (also in leather, as in the photo) and scarves, compared to his predecessor Jonathan Akeroyd who had instead bet on bags. And for this reason, he had hired Daniel Lee in the role of creative director. So the reversal of strategy could also bring a change in leadership: rumours speak of Lee leaving in the direction of Jil Sander.
The share price
Burberry shares have gained over 70% since hitting a near 15-year low in early September. Investors are betting that pessimism has peaked, and are putting their faith in Schulman’s performance. The latter is American and will help the brand develop the US market. Not surprisingly, the pricing strategy reflects the expectation for stronger US demand. According to the price data company Luxurynsight, Burberry increased its most expensive price by 115% in the US from January to November 2024, much more than in Italy or China.
The economy
Citi analysts broaden their perspective. And they said that the recent strong sales by Richemont and Brunello Cucinelli could help make investors more optimistic about recovery stories like Burberry. Is the luxury crisis easing?
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