Ollie Smith: Burberry is on the Rebound
After a tumultuous 2024, Burberry, the iconic British fashion brand, is showing signs of resurgence. Its stock has climbed nearly 20% year-to-date, positioning the brand for its best annual gain since 2019, when it experienced a rise of 27%. With a recent return to the FTSE 100 in September, patient investors are left thinking, “It’s about time.”
Why Has Burberry Stock Struggled?
The end of 2024 saw Burberry solidifying its reputation as fashion’s proverbial problem child. Several factors contributed to its struggles: a failed foray into leather goods hindered growth plans, the brand grappled with distinguishing itself from other luxury peers, and a series of leadership changes left investors uncertain about the company’s future direction.
Adding to these internal challenges was a larger, pervasive issue in the luxury market, particularly intensified by a slowdown in demand from Chinese consumers. Over two years, from January 2023 to December 2024, many big-name fashion brands faced headwinds, but Burberry bore the brunt of the downturn, suffering a staggering 56% decline in stock value. In contrast, competitors like LVMH and Kering managed losses of only 15% and 49%, respectively. By July 2024, the situation became so dire that Burberry even stopped paying dividends.
Is Burberry Stock a Buy, Sell, or Hold?
Despite these adversities, there’s a growing belief among analysts that Burberry is on the brink of reinvention. Morningstar senior equity analyst Jelena Sokolova has maintained her confidence in the brand, suggesting that its potential lies in expanding outerwear collections and introducing more affordable clothing lines—a strategy that is already taking shape.
In November of the recent quarter, Burberry’s results surpassed analyst expectations, with like-for-like sales returning to growth in Q2 2025. Outerwear turned out to be an outperformer across all regions, signaling a shift in consumer preference and a successful pivot. Importantly, there are promising signs of long-term profitability, supported by improved gross margins and effective cost control measures.
So, is Burberry a buy? Current trading prices hover around £11.51. Morningstar’s Sokolova assigns a fair value estimate of £13.70 to the stock, suggesting that shares are undervalued.
Burberry may not yet be the pinnacle of luxury, but its trajectory appears to be improving. As the old saying goes, “Fashionably late is better than never,” and for a brand with such a storied history, that sentiment rings especially true.
For Morningstar, I’m Ollie Smith.
The author or authors do not own shares in any securities mentioned in this article. You can learn more about Morningstar’s editorial policies.