Burberry (BRBY.L): H1 Preview: Weathering the Storm

Following our prolonged scepticism on Burberry's elevation strategy, we turned positive on the stock in early 2025 as management refocused the brand on its core strengths: outerwear, heritage and more accessible price points. With retail, wholesale and gross margin trends all improving, we believe the recovery is now firmly underway. However, against a softer luxury demand backdrop and with investor focus increasingly shifting to next year, the key debate is no longer whether the strategy is working, but whether sales growth can remain strong enough to drive meaningful operating leverage. We expect Burberry to continue outperforming peers, while valuation remains undemanding and reflects lingering doubts about the sustainability of the turnaround. Buy. BRBY is due to report H1 FY27 results on 12 November. We forecast H1 sales of £1,087m (+5% y/y, +4% cFX), supported by +7% cFX wholesale growth and Q2 retail LFL of +4%, easing modestly from Q1 as sector demand softens. We expect gross m