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Burberry: Analyst reaction

Burberry has warned that full year profits are likely to be at the lower end of market expectations after second quarter sales growth slowed at the luxury British brand. Drapers takes a look at the reaction from analysts.

Analysts were caught out by this slow in growth, which independent analyst Nick Bubb described as “unexpected”.

“The weak global economy gets the blame, but there is no detail in the statement about which parts of the world are suffering the most,” he added.

Investec analyst Bethany Hocking said Burberry’s shares and the wider luxury sector were likely to suffer today after the unscheduled announcement.

Although the team retained its long-term view that Burberry’s “strategy, luxury positioning and management” would hold it in good stead, she acknowledged that “today’s statement does, however, imply a significant slowdown and Burberry is not immune from wider macro-economic turbulence”.

Jaana Jatyri, chief executive of fashion forecasting company, Trendstop.com, said: “Burberry’s latest results show that even the top-end of the market isn’t functioning at full capacity in the current economic climate.

“Unfortunately, people lacking confidence do not shop at Burberry,” she added. “A percentage of the aspirational buyers that have driven Burberry upwards are starting to run out of steam.”

Jatyri continued: “In recent years, Burberry has thrived in the emerging markets, where people crave democratic luxury, but even the emerging markets are slowing. This is not the beginning of the end for Burberry, just a shot across the bows.”

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