Burberry sales expected to fall again amid luxury market slowdown
The fashion giant recently dropped out of the FTSE 100 but it has attracted takeover interest, according to reports.
Burberry sales are expected to fall by about one-fifth next week, as the struggling fashion retailer continues facing a slowdown in the luxury market amid reports of a possible takeover.
The company, which recently dropped out of the FTSE 100 because of its declining share price, will announce its first half results on November 14.
Analysts expect sales to come in at about £1.1 billion for the first half, significantly lower than the same period last year.
Meanwhile, the company is expected to post a loss of about £45 million compared to last year’s interim profit of £225 million.
Burberry joins several other retailers in suffering from a stagnant market in the luxury sector, with the key Chinese market particularly hit.
Its shares recently fell to their lowest level since 2009, but received an unexpected boost earlier in November when trade journal Miss Tweed reported that Moncler, which also owns Stone Island, was considering buying Burberry.
The outlet cited industry sources who said the luxury goods giant LVMH, an investor in Moncler, wanted it to instigate a takeover.
Shares in the company were valued at 818p on November 8.
Burberry has had several new chief executives in recent years, with the latest, Joshua Schulman, appointed in July, having previously worked at Michael Kors and Coach.
Michael Hewson, an analyst at Market Insights, said: “While a slowdown in the luxury market hasn’t helped its fortunes, the company’s fortunes haven’t been helped by a management strategy that has seen numerous CEOs come and go.”
Experts see Burberry doing better in the second half of its financial year which includes the winter months, typically a busier trading period for retailers, with £2.4 billion of sales and an operating profit of £30 million.
Analysts at AJ Bell added the second half forecasts indicate “better momentum” later in the financial year.
They wrote: “Whether Mr Schulman is able to exude any such optimism may be the key feature of this set of results.”
