Expectations about Burberry Group PLC (LSE:BRBY) third-quarter update next week have been turned on their head by the numbers from luxury jewellery and watch group Richemont on Thursday.
Shares in the Cartier owner jumped more than 15% as it said final quarter sales had improved by more than 10% despite ongoing weakness in China and due to a surge in US sales.
Burberry jumped more than 7% in sympathy on hopes that the luxury sector generally might be turning up again after a tough 2024.
Canadian broker RBC hinted something to that effect might be in play when making Burberry its turnaround pick for 2025, saying that key trends in the US and China all looked ‘more amenable’ this year.
RBC has a 1,000p price target for Burberry.
UBS, meanwhile, sees third-quarter sales dropping 11% both actually and on a like-for-like basis.
Key issues it sees are brand momentum, underlying gross margins and the impact of stock clearance, more cost-cutting on top of the £40 million already in place and the future of chief designer Daniel Lee following the reversion back to classic lines.