Despite a string of sharp movements lower across the year, 2017 wasn’t too bad for Burberry (LON:BRBY). Opening at £14.96 the stock managed to climb to a closing price of £17.97, completing an impressive 20% increase across 12 months. It hasn’t really moved since then, with the fashion retailer now sitting at a current trading price of £17.85.
The most recent of Burberry’s sharp declines came following 9th November’s half year report, a statement that caused the stock to plunge nearly 10% from the £20-teasing all-time high the day previous. The figures themselves were pretty damn solid: pre-tax profits surged 26% to £128 million, while underlying sales were up 4% to £1.26 billion, as were the firm’s like-for-likes.
Yet that isn’t what investors chose to focus on; that honour went to the new CEO Marco Gobbetti’s quest to ‘sharpen’ the company’s global positioning. Gobbetti is aiming to reinvent Burberry as a super luxury brand, a change that involves dramatically raising the price – and therefore margins – of its products to match its top-end items like its trademark trench coats. It was the cost of all this as much as the concept that spooked investors – for FY 2019 and 2020 spending would be between £150 million and £160 million per annum, rising to between £190 million and £210 million in the medium term.
A further update on the rollout of this ambitious plan – which was impacted by the shock departure of creative director Christopher Bailey just over a week before the announcement – will be welcome on Wednesday. As for its Q3 figures, analysts are expecting Burberry to post a healthy 3% rise in like-for-like sales, marking its 6th consecutive quarter of positive growth.
Burberry Group PLC has a consensus rating of ‘Hold’ alongside an average target price of £16.99.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved. In relation to fixed odds, Spreadex Ltd is licensed and regulated by the Gambling Commission under licence number.