From Morningstar: 2024-11-14 09:46:13

Burberry maintains fair value estimate despite weak first-half results. Shares trading with 80% upside potential. Turnaround plan involves focus on strong brand areas like outerwear and scarves. Pricing strategy includes selective price increases on high-brand strength products. Cash flow negative due to revenue decline and operating losses, addressed through inventory clearance and dividend suspension.

Burberry’s renewed focus on core products, like outerwear, seen as positive for brand turnaround. Strategy shift towards appealing to wider consumer audience versus niche fashion-driven approach. Pricing strategy includes raising prices on strong brand products and resetting pricing for weaker products. Company maintains store footprint and avoids accessible luxury offerings.

Burberry’s cash flow negative at £184 million in first half due to revenue decline and operating losses. Company addresses cash flow concerns with inventory clearance and dividend suspension. Morningstar metrics for Burberry: Narrow economic moat, 5-star rating, fair value estimate of £13.30, high uncertainty rating, in consumer cyclical sector. Share price vs fair value estimate chart provided.



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