Equities Update: Burberry, oil, Netflix…

Following the announcement of Burberry’s results, please see below for commentary from Garry White, Chief Investment Commentator at Charles Stanley.

Garry White, Chief Investment Commentator at Charles Stanley, comments: “Market expectations ahead of Burberry’s first-quarter trading update reflected tempered optimism – and that cautious hopefulness in the market was rewarded, with the high-fashion group posting a smaller-than-expected fall in sales. Encouragingly, Burberry’s turnaround strategy – focused on product refinement, store optimisation, and digital investment – appears to be stabilising its recent poor performance.

“Today’s update will be welcomed across the wider luxury-goods sector, where Burberry is regarded as a bellwether, particularly in Europe. However, it is too early to declare a full recovery in the troubled luxury sector. The economic outlook remains clouded by unpredictability and uncertainty, not least due to Donald Trump’s tariff policy. While Chinese sales continued to decline, strength in the US offers a promising sign of stabilisation across the group.

“The other pillars of chief executive Joshua Schulman’s strategy – prioritising core categories such as outerwear and scarves, clearing excess inventory, and cutting costs – must continue to deliver in the coming quarters. Only then can the current tempered optimism surrounding Burberry evolve into something more positive and enduring – both for the British high-fashion retailer itself and for the struggling luxury-goods sector as a whole.”

Burberry unveils better results

Chris Beauchamp, Chief Market Analyst at IG “While still down, the most recent sales performance from Burberry was much better than feared, which is just what is needed for a share price that has rallied nearly 100% since the April low. Given the lowly expectations around its performance, a move back into sales growth could provide the catalyst for plenty of upside in the shares, with a move back above £15 no longer looking like an impossible goal.”

Burberry shows early signs of turnaround as sales beat expectations

Adam Vettese, market analyst for eToro says: “Burberry’s first-quarter results show the iconic British brand may finally be turning a corner or at least buttoning up its turnaround efforts. Comparable store sales dipped just 1%, far better than expected, and a marked improvement from last year’s sharp declines.

“The market has received it well with shares up in early trading, as signs of turnaround efforts to recover Burberry’s brand identity are beginning to show.

“Encouragingly, the Autumn collection was well received, and key categories like outerwear and signature Burberry staple such as scarves are seeing stronger traction. That said, there’s still some fraying at the edges. Overall retail revenue fell 6%, and performance in Asia, particularly China and Japan, remains under pressure. The macroeconomic backdrop isn’t giving luxury retailers much shelter either. Still, today’s figures offer a reassuring read on Schulman’s ‘Burberry Forward’ overhaul.

“The uptick today shows more coherence in execution and product strategy. It’s not a complete transformation yet, but if the team can build on this momentum, Burberry could be back in style with both consumers and investors before long.”

Comment: Oil holds steady following EU sanctions on Russia

Nikos Tzabouras, Senior Market Analyst at Tradu.com, said: “Oil prices hold firm as the European Union agrees on its strongest sanctions package against Russia. Summer travel demand, encouraging US economic data and a drop in US inventories all support crude prices.

Netflix stumbles despite strong earnings

Netflix reports strong earnings as focus shifts to ads and improved content efficiency

Lale Akoner, global market analyst at eToro says: “Netflix delivered a strong Q2, beating expectations with $11.1B in revenue and $7.19 EPS. More importantly, operating expenses remained flat, allowing top-line growth to flow through to margins. Full-year margin guidance was raised to 30% reported, an encouraging sign of improving operating leverage as the business matures.

“Subscriber growth in the US is stalling, and engagement per user isn’t increasing. But the company isn’t pretending otherwise. Instead, it’s leaning into pricing power, global growth, and an ad tier that’s finally starting to scale; ad revenue is set to double this year. That’s a credible new revenue stream.

“Content spend will ramp in the second half as major titles return, but management is clearly focused on margin discipline. There’s no move into legacy M&A or bloated cost structures, just targeted reinvestment in high-return areas like global content, advertising infrastructure, and live programming.

“AI is also starting to matter. Netflix is applying generative tools in production (e.g., AI-powered VFX that cut delivery times by 90%) and using real-time recommendation engines to improve viewer targeting and ad personalization. Long term, this can be a material driver of both margin and scalability.

“In conclusion, Netflix’s Q2 results reflect a transition toward a more mature operating model focused on margin expansion, cost discipline, and broader monetization. The company is balancing slower user growth with stronger pricing, growing ad revenue, and improved content efficiency. With engagement holding steady and cost structures remaining under control, Netflix appears to be building a more sustainable, diversified business model. For investors, the focus now shifts from pure growth to the quality and consistency of earnings.”