Burberry Group PLC (LSE:BRBY) faces a race to revive fortunes by turning back to its roots after the luxury firm’s strategic update and results on Thursday offered initial relief.
AJ Bell analyst Russ Mould noted the turnaround, which boss Joshua Schulman said would see focus return to its core traditional product range, was needed.
Time was “clearly of the essence” though, Mould added, given Burberry was “bleeding cash and racking up material losses”.
Mulberry had unveiled a £41 million adjusted loss for the first half, against a £223 million profit a year earlier, alongside the revival plan.
UBS highlighted the figure was better than the £46 million loss analysts had been expecting, offering some relief.
However, targets to rebuild profitability through the refocus and return sales to £3 billion annually lacked a timeline, UBS pointed out.
The strategic update provided “little financial colour” and “could be somewhat disappointing,” UBS added.
Burberry was also at the mercy of Chinese consumer sentiment, on which Burberry heavily relies and where sales fell by 24% over the first half, Mould said.
Charles Stanley’s Gary White commented Schulman had an “unenviable” task as a result, suggesting unconfirmed reports of a takeover approach by Mocler could be “exactly what Burberry needs”.
Shareholders appeared convinced by the update though, as Burberry soared 20.7% on Thursday.