- Boss Joshua Schulman ‘encouraged’ as luxury brand fights off predators
Burberry is expecting to offset losses suffered in the first half of its financial year after the group’s renewed focus on ‘timeless British luxury’ helped drive bumper festive trade.
Boss Joshua Schulman launched a strategy shake-up in the second half of last year in efforts to lift performance and fend off the potential for an opportunistic takeover swoop.
Burberry, whose shares have lost almost half their value over the last five years, has been emphasising its signature outerwear offering via the firm’s ‘it’s always Burberry weather’ marketing campaign, featuring British stars such as Oscar-winner Olivia Colman.
It has also run an advertising campaign for its duffle coat featuring Chelsea footballer Cole Palmer.
Schulman told shareholders on Friday he was ‘encouraged’ by customers response to the campaign, as well as its festive ‘Wrapped in Burberry’ promotion.
He added: ‘These activations resonated with a broad range of luxury customers leading to an improvement in brand desirability and strength in outerwear and scarves.’
‘Cold Palmer’: Chelsea star Cole Palmer has featured in Burberry’s recent campaigns
Burberry posted a 4 per cent dip in quarterly comparable store sales for its third quarter to 28 December, beating market forecasts of a 12 per cent slump.
Americas sales outperformed with a 4 per cent rise, while Asia Pacific revenues sank 9 per cent and mainland China was down 7 per cent.
It comes amid a return to cautious optimism in the global luxury industry following a post-pandemic slowdown driven by rampant inflation, as well as economic woes in China – a crucial market for the sector.
The group said the forecast-beating results mean ‘it is now more likely’ its second-half results will ‘broadly offset’ Burberry’s first-half adjusted operating loss of £41million – ‘notwithstanding the uncertain macroeconomic environment’.
Schulman said: ‘Since launching Burberry Forward in November, we have moved at pace to advance our strategy to reignite brand desire, improve our performance and drive long-term value creation.
‘The acceleration of our core categories reinforces our belief that Burberry has the most opportunity where we have the most authenticity and that our strategic plan will deliver sustainable, profitable growth over time.
‘However, we recognise that it is still very early in our transformation and there remains much to do.’
Burberry shares soared 11.7 per cent to 1,196p at the open on Friday.
Robinhood UK lead analyst Dan Lane said: ‘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.
‘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.
‘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.’
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