It’s ‘goodbye FTSE 250’ and ‘hello FTSE 100’ (again) for Burberry shares!
The Burberry Group (LSE:BRBY) share price has done so well lately that it will soon be promoted from the FTSE 250 to the FTSE 100. It last featured in the premier index of UK shares in September 2024, having enjoyed a 15-year unbroken run at the top.
But a move too far upmarket, a shift away from its heritage styles and a slowdown in the global luxury market damaged sales. To preserve cash, it suspended its dividend and embarked on a cost-cutting exercise.
On 15 July 2024, the group appointed Joshua Schulman as its chief executive on a salary of £1.2m plus bonuses. I suspect the majority of shareholders will think this is money well spent given that, since then, Burberryâs share price has risen by more than 75%.
In July, the group reported a 6% fall in revenue for the three months ended 28 June. It described the market as âchallengingâ and âuncertainâ. Despite this, the groupâs share price ended the day 5.6% higher.
At the time, I said I would revisit the investment case once it became clearer how its autumn collection was being received by shoppers. As we move into September, I think now would be a good time to do this.
Back in fashion?
A look at Google Trends suggests that the search term âBurberryâ is becoming increasingly popular. For the month of September, internet searches havenât been as high since 2019. This might not be the most reliable indicator but without access to internal sales data itâs the best Iâve got.
In February, the groupâs design chief Daniel Lee won the plaudits of Vogue when Burberryâs autumn 2025 collection was unveiled. Acknowledging a return to what the fashion house does best, the magazine said: âIncreasingly disillusioned with an algorithm awash with trends, people are searching for the joy in getting dressed again, something that begins by honing in on clothes they will actually wear, or can see themselves wearing. Pieces Lee delivered in spades.â We will know whether customers agree when the group unveils its interim results on 13 November.
Encouragingly, the brand has also moved up 53 places to 37th in RepTrakâs annual survey of the worldâs most reputable companies. Rankings are based on public opinion data, online surveys, stakeholder sentiment and media content.
It’s also returned (in 17th place) to The Lyst Index, a guide to “fashion’s hottest brands“. Claiming to have the largest data set in the industry, Lyst combines this with internet searches, social media mentions and engagement statistics to come up with its rankings.
Been here before
Burberryâs been around since 1856. Itâs been through â and survived — tough times before. And I think thereâs some evidence to suggest that it might have turned the corner. Importantly, the pace of decline in its top line is slowing. Although this doesnât sound like a huge vote of confidence from customers, the recent momentum in the share price suggests investors are becoming increasingly confident that a turnaround is under way.
There are still question marks over the luxury market but Burberry isnât the most expensive fashion brand out there. This means it could recover more quickly than some of the uber-pricey ones.
That’s why I recently added the stock to my portfolio and why I think itâs one for investors to consider.
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More reading
- As Burberry prepares to rejoin the FTSE 100, could the stock be the next Rolls-Royce?
- As Burberry reclaims a spot in the FTSE 100, where next for the share price?
- Burberry isn’t the only ‘unpopular’ UK stock to nearly double in just 12 months!
James Beard has positions in Burberry Group Plc. The Motley Fool UK has recommended Burberry Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
