Shares of FTSE 100-listed Burberry Group PLC (GB:BRBY) soared after the retail company launched a strategic plan to revamp its brand along with its interim results for FY25. The plan named “Burberry Forward” aims to improve the company’s sales and turn around its performance. Investors reacted favourably to the new plan despite the disappointing numbers in the first half of FY25. BRBY stock gained almost 20% as of writing.
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Burberry Group is a global luxury brand for clothing, footwear, and accessories across various international markets.
Burberry’s Revival Plan Shifts Focus to Signature Styles
According to Burberry’s revival plan, it will now again focus on its iconic trench coats and scarves to attract customers back to its brand. Additionally, it will adopt a more restrained pricing approach for bags and shoes while leveraging its rich heritage.
The company has also launched a cost-saving program aimed at achieving annualized savings of £40 million, with £25 million expected to be realized in FY25.
Burberry’s H1 Results Signal Tough Times
Turning to first-half numbers, Burberry reported a 20% year-over-year decline in its revenue of £1.1 billion at constant currency. At the same time, it recorded an adjusted operating loss of £41 million, a sharp contrast to the £223 million profit in the same period last year.
Regionally, sales in the Asia-Pacific region fell 28% in Q2, while the Americas experienced an 18% decline.
Analysts Weigh in on BRBY Results
Analyst Grace Smalley at Morgan Stanley was impressed with the turnaround strategy and believes it depicts confidence on the management’s part. Following the results, Smalley confirmed a Hold rating on BRBY stock, predicting a downside of 26%.
Meanwhile, RBC Capital Markets analysts highlighted that Burberry’s weak performance is primarily due to a challenging luxury market. However, they also believe the brand’s strategic shift back to outerwear could improve its position.
Is Burberry Stock a Buy?
BRBY stock has received a Hold rating on TipRanks, backed by a total of 13 recommendations from analysts. It includes seven Hold, two Buy, and four Sell ratings. The Burberry share price target is 661.67p, which is 24% lower than the current trading level.
