Burberry Share Price Target Cut as Growth Strategy Remains a Work in Progress

Goldman Sachs analysts cut their price target for Burberry (LON: BRBY) in a note to clients on Monday, citing concerns that the brand's strategy to boost leather goods sales remains a “work in progress.”

According to Goldman Sachs' analysis of pricing, Burberry's leather goods “offer has greater exposure to more entry-level price segments” compared to its luxury peers.

While this suggests Burberry is “actively reviewing its product offer and pricing architecture,” the analysts believe it also indicates “the sales environment remains challenging,” and the brand is struggling to regain market share.

“We revise our sales growth estimates by -3% per annum,” Goldman Sachs stated, resulting in a lowered price target of 1380p, down 5% from their previous estimate.

Despite the downgrade, Goldman Sachs maintains a Neutral rating on Burberry.

Shares of the luxury fashion brand are down more than 30% this year as the company has been impacted by a slowdown in luxury spending and challenges in the key China market. In its FY24 results, the company revealed that adjusted operating profit fell by 34%. In addition, comparable store sales in the Americas fell 12%.

In May, analysts at Barclays lowered the firm's price target on Burberry to 1,090p from 1,340p, keeping an Equal Weight rating on the shares.