Citi Lowers Burberry Price Target on Softer Luxury Demand

Citi has lowered its price target on Burberry Group (LON:BRBY) to £14.6, citing a softer backdrop for the global luxury goods industry over the summer months. Despite the reduction, the firm maintained its "Buy" rating on the British luxury fashion house's shares.

Slowing Growth Forecast

In a note to clients, Citi projected that Burberry's retail like-for-like (LFL) growth will slow to 3% in the second quarter of fiscal 2027. This would mark the first sequential slowdown in two years, down from the 5% growth recorded in the fourth quarter of fiscal 2026 and the first quarter of fiscal 2027.

While this represents a deceleration, it would also be the fifth consecutive quarter of positive LFL growth. Analysts noted that the two-year stack LFL growth, a measure that smooths out short-term volatility, is expected to remain resilient at 4%, consistent with the first quarter.

Macro Headwinds Impacting Sector

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Citi attributed the anticipated slowdown to several macroeconomic and industry-specific headwinds that have emerged recently. Key challenges identified by the firm include:

• Weaker macroeconomic conditions in China.
• Hot weather across Europe impacting shopping habits.
• Negative trends in U.S. luxury credit card spending during July and August.
• More volatile tourist flows globally.
• Renewed geopolitical tensions in the Middle East.

As a result of these factors, Citi has trimmed its sales estimates for Burberry by approximately 1% for fiscal years 2027 through 2029. The firm also cut its fiscal 2027 EBIT estimate by about 1%, while leaving its projections for fiscal 2028 and 2029 unchanged. Despite the near-term challenges, analysts believe the company's "Burberry Forward" strategy is showing positive results across key categories and markets, particularly in Greater China and the U.S.