Source: Sharecast
Berenberg noted that Burberry was "undergoing a strategic reset" to restore brand coherence, rebuild margins and re-establish growth. While it said early actions had addressed product and distribution mis-steps, the focus now shifts to execution.
The German bank highlighted that Burberry's luxury apparel market share has declined to 1.7%, even though the group had "returned to modest growth" in the second half of 2025, while peers such as Moncler and Prada have gained ground.
"While engagement is improving in China, with the brand re-entering the COMPASS index's top 10, Western markets remain weak and the Americas have not delivered the consistent growth achieved by peers. Distinguishing structural brand improvement from cyclical recovery will require multiple quarters, leaving execution risk skewed to the downside," said Berenberg.
The German bank, which values Burberry using a blended discounted cashflow and enterprise value-to-sales multiple, said the stock trades below its ten-year average of 2.3x, which it views as appropriate given execution risk and macro uncertainty.
"On a forward P/E basis, Burberry trades at a notable premium to the sector, 29.7x FY27E P/E versus 23.4x for the luxury average," added Berenberg. "With recovery expectations already reflected, scope for a further re-rating appears limited."
Reporting by Iain Gilbert at Sharecast.com