Hargreaves Lansdown argues that Burberry (LON:BRBY) is ‘doing the right thing’ by pushing into the higher luxury brand range, Citywire reports. The comments came after the retailer updated investors on its full-year performance yesterday.
Burberry’s share price rose on the back of the results, adding 3.58 percent to close at 1,868.00p. The stock outperformed the broader UK market, with the benchmark FTSE 100 index adding 11.22 points to close 0.15 percent higher at 7,734.20.
Retailer ‘doing the right thing’
Citywire quoted Hargreaves Lansdown fund manager Steve Clayton as commenting yesterday that Burberry’s full-year numbers ‘will reassure investors’. The blue-chip retailer posted a three-percent rise in profits yesterday and announced a £150-million share buyback.
“Market confidence in the Burberry story was knocked last November by Marco Gobbetti’s decision to invest time, effort, and profits into the move to push Burberry ever more upmarket,” Clayton, manager of the HL Select UK Growth Shares fund, which has a 3.8-percent position in the stock, pointed out. “Top shareholder GBL sold out last week, knocking the price when potential buyers opted to wait for these results. We think Burberry is doing the right thing, because top luxury brands are fabulous assets that generate cash reliably, year after year.”
Burberry’s chief executive Marco Gobbetti has been looking to move the luxury goods retailer further upmarket and earlier this year, the company appointed former Givenchy director Riccardo Tisci to replace Christopher Bailey as a chief creative officer.
Other analysts weigh in on results
Mamequa Boafo, a retail analyst at GlobalData, told the Guardian that “reigniting consumer appetite for the British luxury fashion house is ever more important in order to hold its appeal,” while noting that the wider trading backdrop remained ‘challenging’.