On Thursday, HSBC analyst Erwan Rambourg updated the price target on Burberry Group (OTC:BURBY) PLC (BRBY:LN) (OTC:BBRYF) to GBP 12.50, up from the previous GBP 8.80, while reiterating a Buy rating on the stock. The adjustment follows Burberry (LON:BRBY)’s recent fiscal year 2025 results, which surpassed expectations, coupled with a strong management outlook presented during the results announcement.
The luxury fashion house plans to significantly reduce its workforce, with approximately 1,700 positions set to be eliminated. These cuts will primarily affect the company’s global and regional headquarters rather than its retail stores. According to the analyst, these reductions are expected to generate an additional GBP 60 million in savings for Burberry, adding to a previously announced GBP 40 million in cost savings.
Burberry’s strategy to downsize is seen as a deep reset within the luxury sector, and HSBC believes that the speed of the brand’s product reset and clearance indicates that the restructuring efforts will be executed swiftly. The anticipated savings of GBP 100 million are considered substantial, especially when viewed against the company’s historical EBIT levels.
The analyst expressed confidence that the savings from the workforce reduction would provide Burberry with financial flexibility. This could allow for reinvestment in the business if the macroeconomic environment worsens or contribute to the company’s EBIT if the savings flow through as planned. The aim is for Burberry’s current operating margins, which are thin at 1% for FY25, to improve significantly as a result of these measures.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.