Join our community of smart investors

Burberry at “apex” of transformation

Riccardo Tisci’s first collection recently hit stores, to a “very encouraging” reaction
May 17, 2019

Burberry (BRBY) continues to stoke excitement about chief creative officer Riccardo Tisci’s first collection for the luxury fashion house. Mr Tisci’s first line arrived in stores at the end of February, so while management says the reaction has been “very encouraging”, there is little in the way of hard numbers to back that up. However, the group said sales of the new collection were achieving “strong double-digit percentage growth”.

IC TIP: Buy at 1,814p

However, the collection’s early success was not enough to allay fears over the Chinese market. Burberry said it had seen “low single-digit percentage” growth in comparable store sales within Mainland China – compared with high single-digit growth in the prior year – but added that sales were stronger in the second half of the year.

Management said the group is at the “apex” of the transformation strategy launched in November 2017. As part of this, it is aiming to “re-energise” its product offering – evidenced by the appointment of Mr Tisci – as well as expanding its digital reach and rationalising its store portfolio, closing secondary locations and redesigning others. It closed 18 stores on a net basis in the period and upgraded 14.

Bloomberg consensus forecasts an adjusted EPS of 85p for 2020, up from 82.1p in 2019.

BURBERRY (BRBY)   
ORD PRICE:1,838pMARKET VALUE:£7.56bn
TOUCH:1,837.5-1,838.512-MONTH HIGH:2,338pLOW: 1,619p
DIVIDEND YIELD:2.3%PE RATIO:22
NET ASSET VALUE:354pNET CASH:£837m
Year to 31 MarTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20152.5244576.435.2
20162.5141670.037.0
20172.7739565.338.9
20182.7341368.941.3
20192.7244182.342.5
% change-0.4+7+19+3
Ex-div:27 Jun   
Payment:02 Aug