Burberry Group PLC (LSE:BRBY) is set to see the weak trends encountered at the end of its 2024 financial year continue into 2025, reckon Deutsche Bank analysts.
“With limited evidence in the financials of any improvement in sales or gross margin, we have to turn to the operating cost management lever as the main highlight,” they stated.
But analysts say this is not nearly enough to justify optimism for the iconic British luxury brand.
“In our view, if we are talking about cost savings as an important reason for investors to look at the stock we are likely to have missed the major issue," they said.
“It is a challenge to navigate a brand turnaround but with a tough market backdrop and an ongoing cost-cutting programme the mountain looms even higher.”
UBS analysts are equally sceptical about Burberry’s near-term prospects.
Yesterday’s results were “better than feared” because of these cost-cutting procedures. “ Nevertheless, the commentary on current trading, weak first-half wholesale guidance, and continued focus on cost-cutting rather than investments, showed that the likelihood of a successful Burberry turnaround is limited in the near term.”
UBS cut its earnings guidance amid a “much weaker outlook for the margin-accretive wholesale channel and the operating deleverage”.
Deutsche has a 1,300p price target and UBS a substantially worse 750p target against a 1,124p publication price.