Burberry Shares Down 56% This Year: Uncertain Future Ahead?

Burberry Group's (LON: BRBY) shares took a hit this week after Jefferies analysts downgraded the luxury fashion brand from Hold to Underperform in a research note.

The downgrade, coupled with a lowered price target of 490p from 800p, reflects concerns about the company's uncertain future amid a challenging demand environment and potential management changes.

Burberry shares have declined more than 56% in 2024, while they have fallen by more than 68% over the last 12 months.

“A change in management (presumably to be followed by a tilt in strategic direction) and a challenged demand backdrop make for an especially uncertain future at BRBY,” wrote Jefferies.

Jefferies cited the lack of clarity surrounding Burberry's commercial direction and the mixed reviews for its recent Spring/Summer 2025 collection as key factors contributing to the downgrade.

The analysts noted that the brand's “accessible fashion” approach, while aimed at democratising Burberry, may be lacking the “wow-factor” necessary to drive sales growth.

The downgrade comes against a backdrop of a broader slowdown in the luxury goods market.

Goldman Sachs recently lowered its growth outlook for the industry, citing weakness in Chinese consumer spending. The investment bank warned that earnings risks for luxury companies could be exacerbated by a prolonged Chinese consumption slowdown.

Despite the challenges facing the luxury market, Goldman Sachs continues to favor larger luxury brands like LVMH and Richemont, as well as high-end luxury players like Zegna and Brunello.

However, the firm acknowledged that the near-term outlook for luxury stocks could be range-bound due to a difficult six months ahead.