Burberry left feeling under the weather despite revenue upgrade

Slowing global economic growth and the Hong Kong protests are among the challenges the company still faces

Article updated: 22 January 2020 10:00am Author: Ian Forrest

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  • Group beat market expectations as co comparable store sales rose by 3% in the 13 weeks to the end of December.
  • There was further growth from the new collections and Burberry said they now represented around 75% of its retail offer.
  • Shares in Burberry dropped back on this morning’s news due mainly to profit-taking after a good run in recent months.
  • Recommendation: The company still faces some significant challenges, so we continue with our 'Hold' recommendation for investors who are seeking a balanced return and willing to accept a medium to higher level of risk.

Fashion clothing group Burberry beat market expectations with its third quarter trading update today as comparable store sales rose by 3% in the 13 weeks to the end of December. The long-running protests in Hong Kong were blamed for a halving of sales in what is an important market for the company, although sales in mainland China rose by around 15%. There was further growth from the new collections and Burberry said they now represented around 75% of its retail offer. Best of all for investors was an increase in the forecast for full year revenue, which is now expected to be up by a low single digit percentage compared to previous forecast of flat.

The shares dropped back on the news mainly due to profit-taking after a good run in recent months. Today’s figures are the latest that show some improvement in sales, and the rollout of the well-received new collections should continue to provide a boost, but the company is still facing into some significant challenges. Slowing global economic growth, protests in Hong Kong and the recent coronavirus outbreak in China are among them, so we continue with our ‘Hold’ recommendation for investors who are seeking a balanced return and willing to accept a medium to higher level of risk.


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

 

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Ian Forrest

Investment Research Analyst

Ian’s background in investments, financial journalism and research has seen him advising private investors on equities and helping to manage portfolios. His qualifications include the Certificate in Financial Planning and the Chartered Institute for Securities & Investment’s Investment Advice Diploma.

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