With its recent performance anything but luxury, can Burberry bounce back following Thursday’s interim results?
For a while there the high end retailer’s 2018 was going perfectly. Overcoming an initial dip, one that took it from an opening price of £17.96 to a 13 month low of £14.82 by early February, the stock had rallied all the way to a record peak of £23.39 by the end of summer.
Yet since then things have unravelled rather abruptly. From the start of September onwards the company has been haemorrhaging value, with some negative reports arising from a store visit by analysts, and the general nightmare that was October, causing it to plunge below £17. It has lifted off those lows, but is still a long, long way off its August highs, with Burberry Group (LON:BRBY) now at a current trading price of £18.20.
It’s been a while since the firm’s last update, when it reported its first quarter results in July. And despite coming amidst its summer rise, they weren’t great. Total retail revenue was up just £1 million year-on-year to £479 million, as ‘softer tourist demand’ – specifically big-spending Chinese tourists – relating to the stronger pound and euro hurt its performance in the UK and Europe. Comparable sales, meanwhile, did jump 3%, however even that was lower than the 4% growth seen during Q1 2017.
As for Thursday’s half year figures, expectations aren’t high, with HSBC saying it Burberry is looking at ‘relatively pedestrian’ growth in sales and earnings. How forgiving investors will be is the question, given that the company’s new creative director Riccardo Tisci only launched his debut collection in September.
Burberry Group has a consensus rating of ‘Hold’ alongside an average target price of £20.16.
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