Burberry: Signs of Sales Stabilization Amid Strategic Reshuffle; Share Price Grows by Double Digits

Narrow-moat Burberry released its third-quarter fiscal 2025 trading update, showing stabilization after significant sales declines in the first half of fiscal 2025. Retail sales fell by 4% year over year, a marked improvement from the 12%-20% declines seen over the previous three quarters. The company is streamlining its strategy, focusing on its core outerwear and scarves categories, which delivered low-single-digit and low-teens growth, respectively, supported by successful marketing campaigns and strong festive season sales. The market reacted positively to the update with the share price jumping 14% on Jan. 24 and achieving a 23% year-to-date gain. We maintain our fair value estimate of GBX 1,330 per share and see around 10% upside at current valuation levels.