Will Burberry’s new team be able to return the stock to its recent all-time highs following Wednesday’s Q1 trading update?
After a wobble in the first few months of the year, falling from a starting price of £17.92 to 13 month low of £14.79 by early February, the upmarket clothing brand has really turned its 2018 around. From early March to early June the stock went on a bit of a tear, crossing £21.50 for the first time in its history to hit an all-time peak of £21.82.
It then treaded water for the rest of June, bouncing between £21 and £21.50, before tumbling out of that bracket at the beginning of July. Burberry Group now sits at a current trading price of £20.65.
Burberry’s recovery began with the appointment of Riccardo Tisci as the firm’s new Chief Creative Officer, a hiring that was celebrated as an unconventional branching out for the staunchly British brand. That was followed in April by the announcement of Gavin Haig in the newly created role of Chief Commercial Officer, completed new CEO Marco Gobbetti’s managerial squad.
The company’s full year results in mid-May were also well-received. Revenue excluding Beauty wholesale rose 2% to £2.66 billion, while pre-tax profit jumped 4.6% to £413 million. On top of this Burberry raised its dividend by 6% to 41.3p per share, with the added bonus of a £150 million share buyback in 2018.
In terms of Wednesday’s first quarter figures, JPMorgan (NYSE:JPM) are expecting Burberry to post a 4% increase in like-for-likes, leading to the potential for a 0.5% rise in overall retail sales.
Burberry Group PLC (LON:BRBY) has a consensus rating of ‘Hold’ alongside an average target price of £17.85.
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