Investors have high hopes for Burberry to start showing signs of progress in its turnaround when the British luxury brand reports sales for the crucial festive season this Friday.

Joshua Schulman, who took the reins as CEO six months ago, has promised to build the brand back and reclaim lost market share, a tough ask in a struggling luxury market, by focusing on products like trench coats that Burberry is best known for.

Burberry (BRBY.L) shares have gained more than 70 per cent since hitting a near 15-year low at the start of September, as investors bet that pessimism around the brand has peaked and Schulman will be able to drive sales up again.

Analysts expect Burberry to report a 12 per cent decline in comparable sales for the quarter to end-December, according to a company-compiled consensus estimate, an improvement from the 20 per cent drop it reported for the six months to end-September.

‘FOCUS ON AMERICA’

US shoppers could be a catalyst for Burberry if it improves its visibility there, something Schulman has hinted is in his plans, telling investors in November that there is “a lot of focus on America” where the brand has been relatively quiet.

Burberry’s pricing strategy reflects an expectation of stronger US demand. It increased its most expensive price point by 115 per cent in the US in the year to November 2024, far more than in Italy or China, according to pricing data firm Luxurynsight.

Anna Farmbrough, portfolio manager at Ninety One in London, said Schulman, who is American, is “very excited” about the opportunity for Burberry in the United States, and his strong relationships with department stores from his time heading up Coach could help the brand gain more prominence.

“Burberry has never cracked the US,” said Farmbrough. “If they can really improve their perception there it’s a big opportunity for them.”

They won’t be alone, though: luxury brands everywhere are hoping US consumers spend more on designer fashion and expensive handbags as tax cuts and the strong stock market deliver a boost for wealthy Americans.

Burberry’s new advertising campaigns highlight its heritage trench coats and scarves more than bags and shoes, as it seeks to win back customers Schulman says were alienated by less recognisable designs and higher prices.

The fact Schulman gave no precise medium or long-term financial targets gives the company time to build back without risking investors’ disappointment, said Thomas Chauvet, analyst at Citi, adding that he feels the turnaround plan is sensible.

“It’s a return to the fundamentals, the DNA of the brand, but it’s also a projection towards the future where, in an industry that is more and more competitive, brands must focus on their iconic products,” said Chauvet.

Trenches and scarves account for between 35 per cent and 40 per cent of sales and have had higher profitability historically than other categories, he added.

Burberry’s immediate goal is a return to 3 billion pounds ($3.7 billion) in annual revenue, a level it last achieved in its 2022-2023 financial year. That will take time: analysts currently expect sales in the financial year to end-March 2025 to come in at 2.39 billion pounds.

Burberry launched a big sale on its website late last year, causing some concern among investors, Farmbrough said, adding that she believes this was to clear old stock and has not impacted full-price sales of new collections.