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Burberry off to a fresh start

The luxury fashion house has a new chief executive officer, and a new creative director
May 16, 2018

Luxury fashion group Burberry (BRBY) has committed to a further £150m share buyback after full-year operating profits came in ahead of analysts’ expectations thanks to a better performance from the wholesale division. That’s on top of a 6 per cent rise in the ordinary dividend to 41.3p, and the £524m returned to shareholders over the past year (a combination of dividends and share buybacks). The group still finished up with £892m in net cash, having clawed back another £64m in cost savings and pushing free cash flow up 4 per cent to £484m.

IC TIP: Buy at 1838p

Marco Gobbetti joined as the group’s new chief executive last summer, and recently appointed Riccardo Tisci as its new creative head – replacing long-time designer Christopher Bailey. Mr Tisci’s first collection for the brand is expected to hit catwalks this September, although the group’s focus is increasingly online-led. Digital platforms are due to undergo a “refresh”, while a new partnership with online marketplace Farfetch should extend Burberry's reach to more than 150 countries. The group is also reviewing its store estate, closing a net 20 sites during the period.

Analysts at Morgan Stanley expect pre-tax profit of £432m for the year ending March 2019, giving EPS of 76.8p, compared with £471m and 81.9p in FY2018.  

BURBERRY (BRBY)   
ORD PRICE:1,838pMARKET VALUE:£7.7bn
TOUCH:1,838-1,839p12-MONTH HIGH:2,024pLOW: 1,482p
DIVIDEND YIELD:2.2%PE RATIO:27
NET ASSET VALUE:340pNET CASH:£892m
Year to 31 MarTurnover (£bn)Pre-tax profit (£bn)Earnings per share (p)Dividend per share (p)
20142.3344473.632.0
20152.5244576.435.2
20162.5141670.037.0
20172.7739565.338.9
20182.7341368.941.3
% change-1+5+6+6
Ex-div:28 Jun   
Payment:3 Aug