Financial Trading Blog
Stock of the day 07/07/2016 – Burberry Group PLC
Between the start of January and mid-March things were looking great for Burberry, the stock soaring to a 5-ish month high of £14.86 thanks to a combination of strong Asian growth over Christmas and, more importantly, a series of takeover rumours. However, with those takeover rumours turning out to be nothing more than hearsay based on HSBC amassing an increased stake in the company due to a series of trades Burberry soon plunged from its 2016 peak, falling to £13 by mid-April.
(Source: IT-Finance.com 07/07/2016)
Burberry’s decline didn’t end there, the fashion brand posting a 1% fall in half year revenue to £1.41 billion, with a 2% drop in like-for-like sales across the 6 months to the end of March. The company blamed a slump in tourist spending in Europe, alongside suppressed demand in Hong Kong, for the sales slide, news that was little comfort to investors who sent the below £11.50 by mid-May.
The news hadn’t improved by Burberry’s next update, the company stating that it expected the ‘challenging environment for the luxury sector’ to continue as it revealed its full year figures. Pre-tax profits fell 6.5% to £415.6, led lower by a 1% drop in group revenue to £2.5 billion. Hong Kong (and, similarly, Macau) remained Burberry’s main issue; in fact the company’s 1% slide in like-for-like sales turns into a 3% rise when those regions are stripped out.
This only piled on the pressure for Burberry’s stock price, culminating in a 44 month low of £10.40 by mid-June. Yet since then things have begun to improve for the luxury brand, even with the post-Brexit mayhem briefly seeing the stock touch the £10 mark. The reason behind the company’s rise seems to be the sterling’s precipitous decline, with analysts at UBS confident that the ‘weak pound more than offsets weak sector trading’, even if it expects a 5% drop in Burberry’s like-for-like sales in next week’s Q1 2017 report.
Burberry Group sits at a current trading price of £11.71, with an average target price of £14.03 and a consensus rating of ‘Hold’.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
