Jefferies downgrades Burberry, slashes price target

"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 Burberry," it said.

"Our ‘underperform’ recognises that the stock is likely to continue to suffer from an uncertainty overhang.

"And even once the current exceptional GM pressures are recovered, the valuation case for ownership remains weaker than at most peers."

The bank said its reduced price target assumes a calendar 2025/2026 price-to-earnings of 29.2x/15.3x.

As far as the sector more generally is concerned, Jefferies said a weaker China, slower travel spend, and uncertain US remain the key lessons from the second-quarter reporting season.

"They are also the likely features behind a weak H2 to date," it said.

At 0920 BST, Burberry shares were down 4.7% at 597.20p.