Burberry is a ‘hold’ despite challenges in China

12th November 2015


As Burberry reports its second results Graham Spooner, investment research analyst at The Share Centre, explains what they mean for investors…

Shares were marked higher for luxury retailer Burberry this morning despite the group continuing to suffer from a challenging luxury retail market and a slowdown in China. In its H1 results, the company said revenue was relatively flat coming in at £1.105m however, investors should note that pre-tax profit rose by 9% to £155m. The group also stated that comparable store sales since the start of its third quarter had improved relative to the second. Having reported disappointing sales numbers in October, the results today were unlikely to contain any major surprises for the market.

The group is approaching its most important trading period, and despite Burberry’s CEO describing the results today as robust, investors should acknowledge that the environment remains challenging for luxury goods companies in some of the key markets. The group stated today that sales for the start of Q3 are volatile, but overall performance had improved from the previous quarter. We currently recommend Burberry as a ‘hold’ but as the group has experienced a 30% fall in the share price since the spring, contrarian investors keen on the check may have it on the watch list.

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