Burberry Fiscal-Year Results Solid, Helped by U.S. but Dampened by Markdown Exits; Shares Attractive

We maintain our GBX 2,000 fair value estimate for narrow-moat Burberry as it reported fiscal 2021/22 results slightly ahead of our expectations. We see its shares as attractively valued, at a 30% discount to our fair value estimate and in 4-star territory. Our forecasts imply 4.5% average revenue growth post-2021/22 and operating margin scaling to 22% (from 18.5% in 2021/22), which we may skew a bit in the direction of stronger revenue growth and slower margin progression, given the firm seems to prioritize investment in the business. The company retained its midterm forecasts for high-single-digit growth at constant-exchange rates and meaningful margin accretion. We expect new CEO Jonathan Akeroyd, who joined two months ago, to continue building on the prior strategy, but a strategic update will be provided in November with interim results.