Three Things (11/15)

Burberry’s down plaid

Back to basics … Sales at British luxury icon Burberry (BURBY) dropped 20% for the second quarter in a row, spurring new CEO Joshua Schulman to announce a sweeping turnaround plan on Thursday. Dubbed “Burberry Forward,” the strategy aims to refocus on core products like coats and scarves while cutting costs by £40 million annually.  

Schulman, who joined Burberry in July, blamed the slump on past management’s push toward higher-end pricing and niche products, which alienated customers. He emphasized a return to “heritage designs” and Burberry’s staple outerwear to stabilize performance and rebuild brand loyalty. “We’re acting urgently to course correct,” Schulman declared, highlighting plans to target £3 billion in annual revenue over time.

Burberry's global revenue from 2005 to 2024 (in million GBP)

The market responded optimistically, with Burberry shares rising 22% during Thursday’s trading, marking their largest intraday gain ever. Despite this, the brand’s stock remains down 39% year-to-date. Analysts called the overhaul a potential “turning point” for the struggling fashion house, though some cautioned that alignment between Schulman’s vision and creative execution will be crucial to success.

Burberry’s troubles also reflect a broader challenge for luxury brands: the rise of “dupe culture.” Affordable replicas, often sold online, erode the exclusivity that defines high-end goods. Counterfeit products accounted for some $500 billion in global sales, with e-commerce sales making up 40% of this total. As imitation goods flourish, maintaining prestige has become an uphill battle for brands like Burberry.

Speaking of dupes

Amazon answers …  Amazon  (AMZN) is making waves in the e-commerce world with the debut of Amazon Haul, a storefront dedicated to products under $20. Announced this week, the platform positions Amazon directly against budget-focused giants Temu (PDD) and pre-IPO Shein, which have gained traction by offering ultra-cheap goods sourced from Chinese manufacturers.

Available through the Amazon app and mobile site, Amazon Haul promises “crazy low” prices in categories like fashion, home goods, electronics, and lifestyle products. Nearly half of its offerings are priced under $10, with some items going as low as $1. Customers can earn additional discounts—5% on orders over $50 and 10% on purchases exceeding $75—encouraging bulk shopping.

However, Haul trades Amazon Prime’s hallmark fast shipping for slower, cost-efficient delivery. Orders take one to two weeks to arrive and incur a $3.99 shipping fee, waived for carts over $25. This approach mimics rivals Temu and Shein, which have popularized delayed shipping for deep discounts.

Amazon’s timing is strategic. Chinese e-commerce competitors face mounting regulatory scrutiny in the U.S. and Europe over counterfeit goods and copyright issues. To avoid similar pitfalls, Amazon claims Haul’s products are vetted for safety and compliance. Some analysts suggest Haul may mitigate trade tensions by sourcing selectively and ensuring quality standards.

Gold rollercoaster

Highs and lows …Gold has hit a rough patch after soaring to an all-time high of $2,800.80 an ounce on October 30. Just two weeks later, prices have dropped 8.1%, settling in under $2,600 per ounce on Thursday. The slide marks the longest losing streak for gold futures since February.

Gold Futures: Five-Day View

Analysts point to two key drivers behind the decline. First, the strength of the U.S. dollar and rising Treasury yields are increasing the opportunity cost of holding non-yielding assets like gold. The 10-year Treasury yield nears 4.5%, reflecting a “hawkish repricing” of future U.S. interest rates.

Second, geopolitical uncertainty—a consistent bullish factor for gold—is waning. President-elect Donald Trump’s perceived ability to ease tensions in the Middle East and Eastern Europe has reduced the urgency for safe-haven assets.

Despite this, fundamentals like central bank gold purchases remain strong. The World Gold Council reports robust demand from foreign institutions, although 2024’s totals lag behind 2023’s record highs. 

Still, the outlook isn’t all bearish. Rising inflation fears and Trump’s economic policies could reinvigorate gold’s appeal as a hedge. For now, however, investor focus has shifted to equities and cryptocurrencies, with Bitcoin briefly surpassing $93,000 amid market optimism.

Disclosures:

As of writing, AMZN is a holding in Titan's Flagship strategy. GLD and GDJX are holdings in Titan Opportunities strategy.

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