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Highlights:
- Burberry is at a "complex crossroads" as new CEO Joshua Schulman takes over amidst falling demand and stock struggles.
- Stifel has reduced its sales forecasts for Burberry, expecting an operating loss for 2025 due to weak sales.
- Burberry is likely to adopt a strategy focused on classic, timeless pieces and accessible price points, while maintaining its luxury identity.
Burberry Group PLC (LSE:BRBY) is navigating a challenging period as its new chief executive, Joshua Schulman, takes the helm. According to a recent note from Stifel, the British luxury brand finds itself at a "complex crossroads," with steep market hurdles ahead, particularly the drop in demand from China, which has pushed Burberry’s stock to 15-year lows.
Stifel’s analysts have significantly reduced their sales forecasts for the company, cutting projections by 8% for the fiscal year 2025 and 10% for 2026. They also now expect Burberry to report an operating loss for 2025, driven by greater losses in the first half and continued sales weakness throughout the year.
Despite the grim outlook, the broker sees Schulman’s appointment as a key moment for Burberry’s future. The company’s new CEO is expected to unveil a strategic vision aimed at turning the brand around. However, Stifel analysts noted that Burberry’s chairman, Gerry Murphy, had previously indicated in July that the shift would not be drastic but rather focused on rebalancing products and price points that resonate with the brand’s traditional audience.
Burberry is likely to aim for a more "democratic" luxury approach, maintaining its high-end positioning while offering more accessible price points to broaden its appeal. The strategic direction is expected to emphasize timeless, classic pieces and expand the company’s core offerings in outerwear, which has historically been a significant part of its identity.
Stifel has maintained a 'hold' rating on Burberry’s stock, with a price target of 720p, reflecting uncertainty about how quickly the new strategy can take effect and whether it will be enough to counteract the current market pressures. Shares dropped 3.5% to 638p following the announcement.
The company’s first-half results, set to be released on 14 November, are expected to provide further insight into its performance and strategic adjustments under Schulman’s leadership.
