Burberry has rejoined the FTSE 100 as new CEO Joshua Schulman pursues a rebound plan. The firm fell out of the benchmark index in 2024, its 15-year run ended by a share slide after a series of profit warnings. Charlotte Reed looks at the British luxury brand's recovery.

London

Burberry has returned to the FTSE 100 index after being removed a year earlier due to a decline in share price and multiple profit warnings. The company's re-entry follows a period of recovery under CEO Joshua Shulman, who implemented a strategic turnaround plan focusing on core products, pricing structure, and brand revitalization.

Recent quarters have shown improved sales trends for Burberry, though year-on-year results remain slightly negative. The brand's renewed marketing efforts and product launches have contributed to a positive outlook among investors, positioning Burberry for further growth in the competitive luxury sector.

Burberry returns to the FTSE 100

British luxury brand Burberry returned to the FTSE 100 index today, a year after its removal from the index after a 15-year run. Burberry's return was announced earlier this year after a stock price rebound as it looks to execute its turnaround plan. Charlotte joins us with more. Charlotte, I was pondering this earlier. I know that the luxury sector is being raked over again by a lot of the analysts. I'm not sure why because I don't really think any of the dynamics have picked up on the ground in China at all with that consumer. But nonetheless, the analysts are looking at it. If everybody's underweight, it could be a good time for the FTSE 100 to take back on board Burberry stock. Yeah, absolutely. And that was always an issue for Burberry as well, trying to do this kind of turnaround while there was a slowdown in luxury overall. So it's a bit of a double challenge there for the British luxury brand, but certainly reentering the FTSE today. So symbolic and kind of the next chapter in this turnaround has been that we've seen playing out in the past year after the CEO, Joshua Shulman, joined back in July last year. He was a cause and coach before that, and that was after Burberry had issued multiple profit warnings, they sent the shares diving, which meant that then Burberry was out of the FTSE 100 in September last year. And like in November last year, Shulman presented his Burberry forward strategic plan, talking about the focus on outerwear, the trenches, the scars being the strength of the brand, and also reviewing the pricing structure. And that was a key element there where previous management had pushed up the prices quite aggressively, kind of leaving behind also with the aesthetics, some of their core customers. And they said they want to refocus on the core customers and have a more diversified pricing structure. They also looked at revamping the stores and optimizing things, and they also included some layoffs there. So since then, they had some savvy campaigns that have been quite successful online, including with the Oasis frontman over the summer that was called a festival campaign. They had some TikTok influencers being involved. They had a bit of a buzz recently, and that's been working quite well. And overall, investors are seeing quite positively the turnaround, the first move, the turnaround, and looking at the lack-for-lack sales at Burberry. They have been improving quite dramatically over the past few quarters. Now, we're still negative, and that is important. The last results in July were still down 1 percent year on year. The trend has been very, very positive because a year before that, they were down 20 percent. So there are some hopes that maybe in the next earnings in November, we might see positive sales there in the quarter. But that is the challenge here, is that we are now in the next phase of the turnaround for Burberry. And that was, in a sense, what Erwan Rambour, the global head of luxury and consumers at HSBC, said to us last week. When we upgraded Burberry, it was a bit controversial. Now, it's not as much. It's more widespread. But I still think there are good times ahead. And essentially, what's going to move the needle now is the reality of important product launches, whereas before it was more around merchandising tweaks, media campaigns, rather than actual products that move the needle in terms of the turnover. So it's about new products now, because while they did a bit of a tidying up of the business for the past year, now it's really about new products and new visions. They have the show tonight for the closing of the London Fashion Week, where they were kind of testing the revival a little bit of the brand. And now it's the all-important holiday season. We know this is the most important one for Burberry, the autumn-winter one. So that's when we will see whether that turnaround is really happening. But certainly, we've seen the shares having this ride of a really strong recovery for the past year and now allowing Burberry to reenter the food scene today. Can I be stunningly unpatriotic? Good morning to you. How are you? That was my unpatriotic bit. Why would I buy Burberry on 38 times forward when there are some titanic mega names out there trading significantly lower in terms of their forward PE? And I'll just mention the daddy or the mummy or the mamon or whatever you want to call it, or the Mutti if I'm going German. LVMH, 22 times forward. Burberry trades on 38 times forward. Why on earth would I go shopping for a company that sells Macintoshes and they're trading on 38 times forward? Well, for a lot of people to say, actually, the trend going forward might be more positive for Burberry. There's more recovery potential for Burberry than some of these big players. They're still suffering as well. They have seen their sales being hit as well. And you were talking a bit earlier how we don't see just yet a recovery from the luxury buyers, whether it's Gen Zs or the Chinese buyers. Some of the key demographics are so important to the luxury sector. They're not coming back just yet. But obviously for Burberry, because it comes from so far back, because it's in that recovery mode, there might actually be more places for them to go up as well. Can I reshape your question? Because I think it is the right question. If you would buy another stock in the sector, I think LVMH, you get the drinks business and that's not been going so well for them. So you get that bundled up. But perhaps the question is, why wouldn't you buy Kering? I mean, it's a great question. Would you buy Richemont? I mean, if you start thinking about the other valuations in the sector, there isn't. Kering could be the next one. That's why people are watching very closely. You know, Luca De Meo joined just last week. He's named a new CEO at Gucci. So that could be the next turnaround story. But we haven't seen the tangible signs just yet that a turnaround is happening. While at Burberry, we have seen the numbers improve every quarter. So there are some very clear signs that it is happening.

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