Burberry Shares Jump 10% Amid Revenue Drop and Strategic Overhaul

Burberry Group plc (BRBY.L) shares surged by over 10% in early trading on Friday, January 24, 2025, following the company's third-quarter trading update. The luxury fashion house reported a 7% drop in revenue to £659 million ($871 million) for the three months to late December, compared to the same period a year earlier. Despite the decline, the news sent shares soaring by around 15% in morning deals on London's FTSE 250 index.

The company noted that it was more likely to avoid a full-year operating loss after the sales decline was less severe than forecast by analysts. Burberry's new chief executive, Joshua Schulman, who was appointed in July 2024, swiftly launched a turnaround plan focused on cutting costs and selling more outerwear. The Asia-Pacific region saw the largest decline in sales during the third quarter, with turnover in mainland China dropping 7%. However, the Americas region saw a 4% increase in sales, helping to offset the declines in other regions.

Analysts and investors alike have been impressed by Burberry's recent performance, with many viewing the results as a first step in the right direction. Robinhood UK's lead analyst, Dan Lane, suggested that "the point of maximum pessimism is behind [Burberry]." Aarin Chiekrie, an equity analyst at Hargreaves Lansdown, commented after the trading update that "recent months have seen a sharp turnaround in performance, hinting at a much-needed comeback."

Burberry's new chief executive, Joshua Schulman, is pursuing his turnaround plan for the fashion label, which includes a stronger focus on the outerwear category, a new marketing strategy, and a more diversified pricing structure. The company's latest sales decline in the world's second-biggest economy, China, was partially offset by an uplift in revenue from the Americas. Burberry had posted a net loss of £74 million for its first half, after reporting a profit for the same period a year earlier.

In conclusion, Burberry's shares jumped 10% amid a revenue drop and strategic overhaul, with investors and analysts alike expressing optimism about the company's turnaround efforts. The luxury fashion house's focus on core products, cost-cutting measures, and expansion into new markets and channels position it well for long-term growth, despite ongoing macroeconomic uncertainties.