Though it may have hit a fresh record peak of £19.52 towards the end of October, Burberry has had a hell of a time getting there. After rising from an opening price of £14.99 to £18.38 by mid-March, the stock found itself flagging the wrong side of £16 in mid-April, only to rocket back above £18 by early June. The fun didn’t end there, with the stock briefly sinking below £16 once more in mid-July, before finding itself back on the path to its aforementioned all-time high. Burberry now sits at a current trading price of £19.11.
Back in May the company posted its full year results, which were good/bad depending on what you were willing to ignore. While pre-tax profit fell 5% to £394.8 million, it did announce a 5% hike to its dividend and a £300 million share buyback. Revenue slipped 2% to £2.8 billion, but was up 10% at a reported FX basis; the UK was the company’s main attraction thanks to the weakened pound lifting sales, with its US wholesale business its worst performer.
July’s Q1 figures were better, with like-for-like sales growing by double what analysts were expecting at 4%. Retail revenue, meanwhile, rose 3% (and 13% on a reported currency basis), marking a solid first quarter for new CEO Marco Gobetti.
Yet the most interesting news to come out of Burberry this year wasn’t its full year or Q1 figures, but the shock announcement in October that Christopher Bailey – former CEO, current chief creative officer and the man credited for the company’s turnaround – would be stepping down at the end of 2018 after being at the firm for 17 years.
Investors will be looking for a bit more detail about Bailey’s departure, and the timeframe for finding his replacement, as part of Gobetti’s new strategy on Thursday. In terms of the interim results themselves, investors will want to see a continuation of its robust first quarter comparable sales growth alongside an improvement in its profit situation.
Burberry Group (LON:BRBY) PLC has a consensus rating of ‘Hold’ with an average target price of £17.17.
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