From designers Bailey to Lee, success often came from Heritage products in the last 20Y When Christopher Bailey took over as design director in 2001, the brand''s famous check pattern was often perceived as a negative/anti-social symbol. Bailey focused on reinforcing Burberry''s British heritage, making the trench coat an iconic luxury must-have. Under designer Riccardo Tisci (2018-22), the brand shifted to modern, mixing streetwear and high fashion with a focus on Menswear RTW and shoes. With designer Daniel Lee, who took over in 4Q22, the brand has high hopes for the juicy Leather Goods category whilst nurturing heritage products. But we note missteps since 2023: 1) Marketing was ineffective as it was targeted at brand level instead of specific products. 2) Lee''s first FW23 collection was heavy/flashy at a time when pastel/more sober RTW silhouettes were/are trendy. 3) First collection had DD price hikes; we think it would have been better to get brand desirability going again first. Fashion part clearly underperformed Heritage products, and it''s only this year that Lee will be more focused on the core offering (vs seasonal). FY25 a painful one: management unable to guide FY (as they previously did) In May, the company did not guide on FY25 (March year-end). Only Wholesale was guided -25% in 1H25, with 1/3 of the drop linked to ''LFL underlying demand'', whilst Retail will suffer from strong comps until Sept. Though 2H is likely to be slightly better, with the CEO hoping to maintain fixed opex flat on cost control, we foresee significant operating deleverage and a GPM contraction leading to a street-low FY adj EBIT of GBP278m (10.1% margin, -400bp reported y/y). We stand 14% below consensus on EBIT this year but only 2% below on FY26-27. Valuation not shockingly low - and success post FY25 not a given. Remain Neutral Following our estimate cuts on FY25/FY26, we have lowered our DCF-derived TP to GBp1,100 (from GBp1,470). Despite recent poor stock...