We reiterate our cautious fundamental stance on Burberry. 1) Sales – the retrenchment strategy (one brand, 15-20% fewer SKUs, capex guidance cut to £150m from £180m, low selling space growth, stalled product diversification, low/no price/mix boost) is unlikely to boost growth above the sector average as targeted. 2) Margin – opex is being cut to only half the level needed to reach the sector average and is offset by reinvestment and reinstated bonuses, reflecting an opex floor, given the stock’s low capital intensity.