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Date Broker price old target new target view 12-Sep-12 HSBC Neutral 1,072.00p 1,500.00p 1,300.00p Reiteration 12-Sep-12 UBS Neutral 1,072.00p 1,290.00p 1,170.00p Reiteration 12-Sep-12 Oddo Securities Underperform 1,072.00p 1,320.00p 1,230.00p Reiteration 12-Sep-12 Goldman Sachs Buy 1,072.00p 2,045.00p 1,832.00p Reiteration 12-Sep-12 AlphaValue Buy 1,072.00p 1,438.60p 1,419.10p Upgrade
http://www.telegraph.co.uk/finance/markets/9539639/Burberry-directors-snap-up-shares-following-drop.html# A profit warning from Burberry may have sparked a sell-off in the shares, but there were certainly some fans of the retailer who saw a bargain at the lower price. The luxury goods group revealed a host of directors spent more than £1m snapping up Burberry shares on yesterday and today, including chief executive Angela Ahrendts, who bought 50,000 shares at £10.86 a piece. The purchases by the board members were made after Burberry cautioned investors on Tuesday to expect full-year adjusted pre-tax profits to be at the lower end of City expectations. That precipitated the biggest ever one-day drop in the company’s share price News of the directors’ purchases did little to reverse the downward trend, however, with Burberry falling a further 16p to £10.72.
You have to hand to the guys yesterday. Profits warning and they managed to spot it. The question is where was their advice before the profit warning? Still it shows that they are worth the big bucks. Sarcasm switch, to off.
Doesn't surprise me, the quality of their clothing and bags have dropped in the last few years, maybe ever since they moved their factory to China from Wales, they should have kept it in the UK. They use less quality materials now for their clothing and bags are not made with the same quality leather or workmanship. Whats with acrylic and polyester in their clothing, that's what low budget brands use like Primark. I would not be surprised if Gap had a profit warning either since their owner died few years ago, quality has deteriorated there too. Actually most high end stores have slackened in their quality especially the likes of Chanel. Don't shop there anymore, not worth the money for what you get, poor poor quality.
LONDON -- This morning, iconic fashion retailer Burberry (ISE: BRBY.L) was the single-most popular purchase by stockbroker TD Direct Investing's individual clients between the market's opening and noon. How come? A 20% drop in the share price following a warning that current-year profits may come in around the lower end of City forecasts. You can read all the details here, but the bottom line is clear: Burberry has announced a sale -- and this time it's the company's shares, not its clothing, that have had the price slashed. Falling knife -- or bargain? Many investors will have looked at the company's healthy cash position and strong brand and seen a situation analogous to the similar announcement by Tesco in January: a strong business temporarily battling headwinds. For investors who find a price-to-earnings ratio of more than 20 too rich and a yield of just 1.7% too low, today obviously marked a buying opportunity
“This hasn’t become a bad company overnight, nor has it suddenly developed a blocker stake that would deter a bidder (surely some of the explanation for the previously generous multiple),” said Hobbs.
We are neutral on Burberry (recent downgrade), but this fall still looks overdone to us,” said William Hobbs, equity strategist at Barclays Wealth, in answers to emailed questions. He said a new outlook from management likely will bring down consensus estimates in the region by 7% to 8%, meaning the market has decided to derate the stock by around 10%. “This hasn’t become a bad company overnight, nor has it suddenly developed a blocker stake that would deter a bidder (surely some of the explanation for the previously generous multiple),” said Hobbs.
Cut and pasted from jange's earlier post 'Management moves to protect the group's long term luxury brand status, axing cheaper fashion lines in order to buoy prices may have had some impact.' Lets face it BRBY is high end, the rich can afford it, so the less rich save up for it. The more accessible something is reduces its appeal(less is more). I would imaging(in my cynical mind) the markinting dept. will be lining up a royal or a top celeb to drive their Xmas push then sp will rise. Tils
Meanwhile, Seymour Pierce has cut its rating from 'buy' to 'hold' and cut its target price from 1,700p to 1,200p after slashing its current-year and forward PBT forecasts by 12% and 15%, respectively. The broker said this afternoon: "Today's share price fall is disproportionate to the downgrade given the recent de-rating. However, the lack of demand visibility on whether this is a blip or worse to come will impact sentiment short term so we downgrade our recommendation to 'hold' ('buy' since 3 December 2010). A clearer outlook would make us more positive again as we still consider Burberry to be a great long term growth story. Investec cut its 'buy' recommendation to 'hold' and reduced its target price from 1,640p to just 1,140p, saying that it has cut its current-year and forward PBT forecasts by 11% and 18%, respectively. "We remain long-term fans of Burberry, and would not recommend selling the shares at this level, but, until more information is known, nor can we recommend buying here."
Nomura lowered its recommendation from 'buy' to 'hold' and reduced its target price from 1,450p to 1,210p after lowering its forecasts: current-year and forward PBT estimates were cut by 4% and 6%, respectively. The broker said that the 'deceleration" was a "global phenomenon", primarily driven by lower traffic. "Delivery on margin growth, merchandising initiatives and continued prospects for double-digit space at high returns are the reasons to own the shares long term, in our view. However, with very limited near-term visibility, we lower our rating."
Well the 2 Big after hours trades £2.2 Million Buy and £1.4 million buys were at £11.08 and £11.17 so hopefully bode well for the morning just in here for a 5% bounce @ £10.80 lets see GLA
Commenting on today's profit-warning analysts at Seymour Price said: "The trend Burberry is talking about may seem at odds with the rest of the sector news of late but we note that this is current news up until 8th September and would not be surprised if other luxury players are seeing similar trends. "The recent de-rating of the shares has already started to anticipate a slowdown and this slowdown is nothing like the brick wall the sector impacted in 2008 when the financial crisis hit. Indeed, Burberry is in a much stronger position brand and infrastructure wise to react to a slowdown given recent system investment so is unlikely to have the same stock issues. "This news will obviously hit sentiment towards Burberry and the luxury sector and the shares are likely to underperform until there is better news on demand so we are cutting our recommendation to Hold (Buy since 3 December 2010). However, we still consider Burberry a strong long term growth story with significant geographical and product mix opportunities."
"Given this background, we are tightly managing discretionary costs and taking appropriate actions to protect short term profitability, while continuing to execute on our proven five key strategies," she said. Even the economic powerhouse of China has been exhibiting worrying signs recently, with growth slowing more than expected. China, where demand for luxury Western goods had been very strong, reported falling imports and lackluster growth in exports for August. Imports fell 2.6% from a year earlier, while exports rose 2.7% in August from a year ago. In July Burberry warned that it was seeing a slowdown in gift giving in China, including small leather goods, cashmere scarves, but also trench coats. At the time the firm put this down to the once-in-a-decade political change at the top of the ruling Communist Party making consumers nervous about spending. Whatever the cause, the slowdown in key Asian markets has helped take the sheen off a previously rampant Burberry. The company reported a 24% jump in annual profits to £366m in its last financial year, while total revenues were also up 24% to £1.9bn. Seymour Price downgrades to hold (from buy)
Shares in British fashion house Burberry plunged in early trading after it warned profits this year would be at the lower end of expectations. The stock fell almost 18% when markets opened as the firm said it was taking steps to cut costs and maintain short-term profitability. Burberry, which has 196 retail stores, 207 concessions, 48 outlet shops and 58 franchise stores worldwide, said it expected profits for the year to the end of March 2013 to be at the lower end of market expectations. The designer added that trading conditions were becoming more challenging with like-for-like sales flat in the second quarter. The company, which had been riding on the crest of a retail wave driven by it popularity in the Far East, said retail sales growth at constant exchange rates was 6% in the 10 weeks to 8 September. Of this, new space contributed the whole 6%, while like-for-like store turnover was unchanged year-on-year, with sales slowing in recent weeks. Chief Executive Angela Ahrendts, said the second quarter retail sales growth had slowed against historically high comparatives.
Nomura lowered its recommendation from 'buy' to 'hold' and reduced its target price from 1,450p to 1,210p after lowering its forecasts: current-year and forward PBT estimates were cut by 4% and 6%, respectively. The broker said that the 'deceleration" was a "global phenomenon”, primarily driven by lower traffic. "Delivery on margin growth, merchandising initiatives and continued prospects for double-digit space at high returns are the reasons to own the shares long term, in our view. However, with very limited near-term visibility, we lower our rating." Meanwhile, Seymour Pierce has cut its rating from 'buy' to 'hold' and cut its target price from 1,700p to 1,200p after slashing its current-year and forward PBT forecasts by 12% and 15%, respectively. The broker said this afternoon: “Today’s share price fall is disproportionate to the downgrade given the recent de-rating. However, the lack of demand visibility on whether this is a blip or worse to come will impact sentiment short term so we downgrade our recommendation to ‘hold’ (‘buy’ since 3 December 2010). A clearer outlook would make us more positive again as we still consider Burberry to be a great long term growth story. Investec cut its ‘buy’ recommendation to 'hold' and reduced its target price from 1,640p to just 1,140p, saying that it has cut its current-year and forward PBT forecasts by 11% and 18%, respectively. "We remain long-term fans of Burberry, and would not recommend selling the shares at this level, but, until more information is known, nor can we recommend buying here."
Positive Points: The generation of profits at the lower end of current analyst forecasts for the full year would still see a gain in profits being made compared to last year. Accompanying management comments noted that "we are tightly managing discretionary costs and taking appropriate actions to protect short term profitability". Initiatives to strengthen the group's long term luxury brand status may have impacted near term sales performance. Management highlighted at its first quarter update that initiatives to elevate brand equity had been balanced by improved store productivity and new space. Operationally, investment in flagship markets continues. In the first quarter, six large stores opened including a fourth store in Brazil and an outlet in Hong Kong. Management then highlighted plans to open further stores later this year in London, Milan, Chicago, Hong Kong and Shanghai. The group already enjoys geographical diversity, an attribute which many retail rivals such as Marks & Spencer are currently attempting to emulate. A progressive dividend policy continues to be pursued.
Negative Points: Comparable Retail or same store sales in the period to date were reported as unchanged. For the full second quarter period last year, comparable sales rose by 16%. Management highlighted a 'deterioration' over recent weeks. The board currently expects adjusted profit before tax for the full year to 31 March 2013 to be around the lower end of current analyst forecasts. The current consensus analyst forecast for operating profit over the current full year is £446.8 million, an outcome which would be an 18.5% increase over last year’s reported figure. Management moves to protect the group's long term luxury brand status, axing cheaper fashion lines in order to buoy prices may have had some impact. Cheaper handbags, made in Asia have been reduced. Coats made from fabrics woven at Burberry's own mills in Yorkshire have been increased. The lowest price for a trenchcoat has risen to about £1,000. With over 60 stores in China highlighted as of its first quarter trading update, the health of the Chinese economy is a factor. Recent economic indicators appear to suggest a slowing in growth. China’s economic growth slowed to 8.1% in the first quarter, down from 9.2% cent in 2011 and 10.4% in 2010. GDP grew by 7.6% in the second quarter. While Asia proved to be the group's biggest revenue generator as of its last full financial year, the Americas (24.8%) and Europe (31.6%) also remained important. Economic growth in the US has to date proved disappointing compared to past recoveries, whilst the crisis in Europe remains ongoing.
Financial Highlights Retail sales growth at constant exchange rates came in at 6% in the 10 weeks to 8 September 2012 Of this 6% growth, new space contributed 6%, while same store sales proved to be unchanged year-on-year, with a deceleration in recent weeks noted. Management currently expects adjusted profit before tax for the full year to be around the lower end of current analyst forecasts.
Second quarter sales to date: While disappointing (same store sales remained unchanged), the cautionary update did not come as a total surprise. The group's own 'clean-up programme', where management is axing cheaper fashion lines in order to buoy prices, may well have taken some responsibility, while the group's exposure to China has already been extensively highlighted. Comparatives have become increasingly challenging, while a still spluttering US economy remains unhelpful. In all, and given the additional profits warning, investor appetite is now being thoroughly tested. The connectivity between the developing and developed markets appears to be making itself clear, while management moves to protect the group's long term luxury brand status may now be denting short term performance. For now, we believe that analyst opinion is likely to remain under pressure, having already moved from a buy to a strong hold.
Company overview Burberry Group PLC is a British luxury fashion house, manufacturing clothing and fashion accessories. Its distinctive tartan pattern has become one of its most widely copied trademarks. The company has branded stores and franchises around the world and also sells through concessions in third-party stores. It runs a catalogue business and has a fragrance line. HM Queen Elizabeth II and HRH, the Prince of Wales have granted the company Royal Warrants. Burberry's trademark products are its fashionable handbags and exclusive fragrances. Burberry is quoted on the London Stock Exchange and is a constituent of the FTSE 100 Index.
Since, the need for wine at >£100 is increasing ever faster, the need for >.£20 million flats in London and New York is growing and the arrival of yet more >£50k hand bag makers and >£5k suits is ongoing I think the upper price market has parted company with the rest of the world. So I caught the knife. I hope she is "tightly managing discretionary costs" at all times
This will be on a lot of people's radar. Reminds me of when i first got into SGP, bought on the drop(first one) for it to subsequently go down a further 50% albiet due to a clerical error, averaged down and now in a healthy profit. BRBY obviously is bigger with more exposure to buying or lack of. Shorters will probably have their say. Gonna hold off and see where they are closer to the TA 11 Oct. Xmas not far away so people will need scarves. GLA
Angela Ahrendts, Chief Executive Officer, commented: "As we stated in July, the external environment is becoming more challenging. In this context, second quarter retail sales growth has slowed against historically high comparatives. Given this background, we are tightly managing discretionary costs and taking appropriate actions to protect short term profitability, while continuing to execute on our proven five key strategies."
Second Quarter Retail Sales In advance of an active investor relations programme during the rest of September, and given a more challenging external environment for the sector, Burberry today announces retail sales for the second quarter to date. Against strong comparatives last year, retail sales growth at constant exchange rates was 6% in the 10 weeks to 8 September 2012. Of this, new space contributed 6% while comparable store sales were unchanged year-on-year, with a deceleration in recent weeks. Ahead of the key retail trading period in the second half, Burberry currently expects adjusted profit before tax for the twelve months to 31 March 2013 to be around the lower end of market expectations.
http://www.investegate.co.uk/Article.aspx?id=201209110700069418L