Full year results expected next Wednesday
We’re less than half way through 2018 and already Burberry has seen some action. Things got off to a poor start, the stock tumbling to a 13 month low by early February. The thrust of that decline stemmed from the company’s third quarter results in January, which caused a 9% single session slide.
The main problem was the apparent end of the tourist-attracting abilities of cheaper sterling. A drop-off in the number of big-spending Chinese visitors, who had previously been drawn to the UK since the pound plunged in the aftermath of the Brexit, meant that global retail sales only rose 2% against the 3% forecast by analysts. This was a blow to the company’s hopes of firmly establishing itself at the luxury end of the clothing market, with investors also unhappy that the company failed to update on the search for a replacement of Christopher Bailey.
It was the resolution of this last issue that helped the stock recover from the start of March onwards. Burberry revealed its new chief creative officer as Givenchy’s Riccardo Tisci, an Italian appointment that was seen as a radical shift for the traditionally British brand and one that sent the stock 7% higher in the 48 hours that followed the announcement.
The stock really managed to build on the swell of optimism that came with Tisci’s appointment, climbing to a 6 month high of £18.85 by early May. However, reports that Belgian billionaire Albert Frere was selling his 6.6% stake in the company dealt a blow to Burberry’s newfound confidence, sending it to a current trading price of £17.81.
In terms of Burberry’s annual result next week, investors may want to hear something from Tisci. The company could also do with avoiding any further year-on-year sales growth slowdown.
Burberry Group (LON:BRBY) PLC has a consensus rating of ‘Hold’ alongside an average target price of £17.12.
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