Burberry Group PLC’s (LON:BRBY) trajectory is “not changing” despite the decision of its chief executive Marco Gobbetti to exit the luxury fashion retailer before the end of the year, according to analysts at Deutsche Bank.
In a note on Tuesday, the investment bank opened a “Buy idea” on the FTSE 100 firm, saying it was now entering the second phase of its now three-year-old turnaround strategy which is expected to see an “acceleration of the top line growth”.
READ: Burberry may be target for bidders as chief executive leaves
“We believe new management in 2022 would potentially not need to materially change the strategy and would find a clean situation, with most of the kitchen sinking done, the brand repositioning already in full swing, and the wholesale rationalisation completed”, analysts said.
The bank also said that Gobbetti’s replacement will find “a more attractive pricing and positioning for the brand as the self-inflicted removal of markdowns from mainline stores should be completed by fiscal year end”.
“Although the change [in CEO] is a surprise given the timing of the turnaround plan, a new CEO may even nourish new enthusiasm, while we believe the execution is in the hands of an already reinforced operating management. Finally, Burberry is the only public luxury brand with a real 100% free float and no controlling family”, analysts concluded.
The news of Gobbetti’s departure sent shares in Burberry sharply lower on Monday, closing at their lowest level since mid-May.
While the stock was up 1% at 2,081p in lunchtime trading on Tuesday, it is still well below the level it was trading at prior to the announcement.