This Week: Is Burberry’s Turnaround a Go?

What’s Happening: Burberry reports first quarter results on May 14. The average analyst forecast is for same-store sales to fall by 7 percent.

Rebound Blocked: For the quarter ending in December, Burberry reported a smaller-than-expected 4 percent decline in sales, which was good enough to send shares soaring. Unfortunately, the good news, such as it was, stemmed from a strong showing in the US. We all know what happened next.

Turning a Corner: Last week, Citi’s Thomas Chauvet published a “buy” recommendation for Burberry’s stock for the first time since 2008. He’s still in the minority, with just six out of 20 analysts covering the company having a positive rating.

The case for optimism comes down to Burberry finally acknowledging last year, after nearly a decade of trying, that it isn’t destined to be a trendsetting European luxury brand, or to produce the next “it” bag.

Putting the Pieces in Place: Chief executive Joshua Schulman, whose past executive experience includes stints at accessible luxury giants Coach and Michael Kors, laid out his “Burberry Forward” plan last year. It includes cost cuts, lowering average retail prices and focussing on core categories, complete with an “It’s Always Burberry Weather” campaign.

Just as importantly, creative director Daniel Lee is following the same script, with his last collections leaning more into Burberry’s British outerwear heritage with its weekend in the country theme. Burberry is also reportedly looking to replace chairman Gerry Murphy, who has been in that role since 2018.

Still a Risky Bet: While there are some promising early signs (and the US-UK trade deal announced Thursday certainly helps), Burberry optimists are still leaning on the idea that things can’t get much worse than they already have. They may be right. But between the tariffs and the worsening luxury downturn, we’ve learned the hard way this year that there’s always further to fall.

This Week’s Tariff Indicators

What’s Happening: A pair of key US economic indicators drop this week, with April’s consumer price index – aka inflation – out on Tuesday, followed by retail sales on Thursday.

No Recession Here: Inflation came in below the average forecast in March, while retail sales unexpectedly surged as consumers stocked up ahead of Trump’s tariff announcement. For April, economists predict consumer prices to rise 2.4 percent from a year earlier, and non-auto retail sales to tick up 0.5 percent. While some retailers have raised prices, it’s May onward when we’ll likely see the full impact of tariffs.

Luxury Indicators: If you prefer to get your economic readings in a more glamorous fashion, check out Mytheresa’s – or rather, LuxExperience‘s – earnings on May 14, to see if the stock market’s dismal start to the year temporarily put the e-tailer’s wealthy clientele off shopping.

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