Market Analysis: Vodafone, Burberry, WHSmith (US)

Vodafone: Offering relies on third-party content and lack ofexclusive content; Merger with three might distract Vodafone with integration issue. Burberry: Moncler's potential acquisition of Burberry doesn't makesense; Higher Prices and a More Elite Positioning May Be Driving Slowdown; New Artistic Direction Struggles to Appeal to Both Minimalist Luxury Clientele and Logo-Driven New Money Customers. WHSmith’s US Growth Potential: Capitalizing on Airport Upgrades, Expanding Tech Sales, and Strengthening Brand Partnerships

In the telecommunications space, Albie Amankona, Analyst at Third Bridge remarks on Vodafone, informed by insights from industry experts:

"The UK mobile telecom industry faces tough challenges going into 2025. With a saturated market and high 5G infrastructure costs that haven't paid off, operators are feeling the squeeze. The 2021 “text-to-switch” rule has made it easier for users to switch, sparking a pricing war with unlimited 5G plans. Subscriber growth looks flat, with operators mainly vying to steal each other's customers.

"Vodafone, in particular, struggles to keep up. Our experts say, unlike competitors VMO2 and EE, which attract customers with bundled mobile, broadband, and exclusive content, Vodafone relies on third-party content deals with providers like Sky, making its offerings less unique. Its upcoming merger with Three, while creating the UK’s largest mobile provider, might distract Vodafone with integration issues, giving rivals more time to expand.

"To stay competitive, Vodafone will need to invest in exclusive content and seamless bundles post-merger. Without these moves, Vodafone risks losing customers and, in the long run, revenue needed for reinvestment, putting its future growth in jeopardy."

In the luxury space, Yanmei Tang, Analyst at Third Bridge made a series of remarks regarding Burberry:

"Our experts believe Moncler's potential acquisition of Burberry doesn't make sense, as the two brands have distinct identities—Moncler is casual and Italian, while Burberry is formal and British. They see no clear synergies between them in terms of products or target markets. Additionally, the cultural differences between the Italian and British companies could lead to a significant risk of dilution.

"Burberry’s recent results fell short of expectations, with management citing softer market demand. Yet, our experts suggest its new strategy—including higher prices and a more elite positioning—may also be driving the slowdown.

"Traditionally viewed as an entry-point brand in luxury, Burberry balanced high-end runway pieces with affordable items like scarves and shoes that attracted a broad clientele. The recent overhaul removed these accessible items and hiked prices by up to 30-40%, alienating a large segment of buyers while repositioning the brand as more avant-garde and elitist—an approach seen as risky in the current market climate.

"Our experts say Burberry's new artistic direction struggles to appeal to either minimalist luxury clientele or logo-driven new money customers, leaving its target audience unclear.

"Daniel Lee’s work has been praised for its creativity, particularly his focus on expanding Burberry's leather goods. However, there's room to make offerings more feminine and functional to appeal to a broader customer base. Experts see potential in expanding categories like footwear, but at more accessible price points, and suggest a more structured collection strategy for ready-to-wear that blends commercial appeal with Burberry’s heritage.

"With new CEO Joshua Schulman from Coach and Michael Kors, there’s speculation about whether Burberry might shift toward a more commercial path. However, our experts feel Burberry should avoid a straightforward “British Coach” approach. Instead, Burberry could take inspiration from brands like Louis Vuitton by balancing high-end, artistic collections with accessible, core items, keeping its British heritage at the forefront. The success of this strategy will depend on alignment between Schulman’s business acumen and Lee’s creative vision.

Yanmei Tang, Analyst also covers the retail sector and comments on WHSmith (US).

"The US offers a huge growth opportunity for WHSmith, driven by increasing air traffic and much-needed airport upgrades. Many airports, built in the '60s and '70s, have untapped potential in non-aeronautical revenue, which is much lower than the global average. As these airports modernize, WHSmith is well-positioned to capture more market share. Coming from a low base, it is rapidly expanding through its acquisition of MRG, creating a 'flywheel effect' that fuels further growth.

"While airport pricing is constrained by lease structures, its airport business faces less pressure from discounting compared to its tech division, which is dealing with heavy competition. The company sees growth potential in expanding tech sales in underpenetrated airport locations and exploring shop-in-shop opportunities.

"There’s strong demand for higher-quality grab-and-go options, but the current US market offering feels "generic and stale." WHSmith needs stronger partnerships with providers to scale this across the US.

"In health and beauty, US airport offerings differ from the UK, with branded stores like MAC or Kiehl's proving more successful than full-line chemist shops, reflecting different customer preferences.

"Our experts say WHSmith is in a strong position to grow its margin by reaching 30% sales penetration of its own brand and notes the opportunity to improve operations in US hospitals, where many small, poorly run businesses exist."