Burberry (BRBY) has been working to establish a new product offering as part of its ongoing transformation plan. It hired Riccardo Tisci as chief creative officer from Givenchy in March last year, and in February launched his first collection. The group is betting heavily on Mr Tisci’s direction, with new products accounting for 70 per cent of the total offering in its stores, compared with just 10-15 per cent in March.
It appears to be working, with management reporting “strong double-digit growth” in revenues. Like-for-like retail store sales were up 4 per cent in the six months to September, while adjusted operating margins strengthened by 130 basis points to 15.9 per cent. Ongoing protests in Hong Kong led to a double-digit decline in sales there, but fears over luxury demand in mainland China now seem to have been unfounded. Growth in the region was in the mid-teens.
Management is planning to consolidate its position in China with an exclusive new “social retail” initiative with Chinese tech giant Tencent. Under the partnership, the two will combine social media with physical retail stores, starting with a new store in Shenzhen in the first half of next year.
Bloomberg consensus forecasts are for adjusted EPS of 88.5p for the year to March 2020, up from 82.1p in FY2019.
| BURBERRY (BRBY) | ||||
| ORD PRICE: | 2,156p | MARKET VALUE: | £8.8bn | |
| TOUCH: | 2,153-2,156p | 12-MONTH HIGH: | 2,362p | LOW: 1,619p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 310p | NET CASH: | £670m | |
| Half-year to 28 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 1.22 | 174 | 31.9 | 11.0 |
| 2019 | 1.28 | 193 | 36.6 | 11.3 |
| % change | +5 | +11 | +15 | +3 |
| Ex-div: | 19 Dec | |||
| Payment: | 31 Jan | |||
