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Shares I love: Burberry

Burberry should offer participation in the growing wealth of Asia
February 6, 2020

Nick Train, manager of funds including Finsbury Growth & Income Trust (FGT) and LF Lindsell Train UK Equity (GB00BJFLM156), explains why he invests in luxury goods producer Burberry (BRBY). The company is one of nine luxury fashion brands included in consultancy Interbrand’s list of the 100 most valuable brands in the world. 

“Burberry is rated less valuable than, for example, Vuitton (MC:PAR) and Hermes but is still included [in Interbrand's list]," says Mr Train. "And it is one of only five UK brands in Interbrand’s 2019 top 100, alongside HSBC (HSBA), Land Rover, Mini and Royal Dutch Shell (RDSB). So Burberry is not only rare from a global point of view, but extremely rare in the context of the UK economy and stock market – it is the only luxury fashion brand in the FTSE 100.

"Being rare is not enough to make any company a great investment, but it’s a useful start. Gucci and Prada (1913:HKG) are [some of the] competitors to Burberry but [no] other luxury company has the same heritage as Burberry. And none of them can claim the same ‘style anglais’ because Burberry is the only one that can represent that type of Britishness. It’s a style beloved of Asians, meaning that Burberry [should offer] wonderful participation in the growing wealth of that region over decades to come.

“Some investors worry that Burberry’s business is volatile, because of its luxury and fashion character. It is true that its sales and profits are not as predictable as, say, a toothpaste manufacturer. But it is important to take a longer-term perspective. Since Burberry listed as a public company in 2002 its shares have risen more than 10-fold – despite the ups and downs. And we think its best years are still ahead and [buy] the shares [during] periodic scares about China.”