Burberry’s (LON:BRBY) management has “shown a willingness to grasp the nettle and do the right thing for the long term,” Hargreaves Lansdown has said. The comments came after the luxury goods retailer updated investors on its third-quarter performance, posting a fall in revenue, while reiterating its full-year guidance.
Investors reacted positively to the update, sending Burberry’s share price rallying 2.93 percent to close at 1,828.00p following a downbeat start to the session. The stock outperformed the broader London market, with the benchmark FTSE 100 index ending trading in negative territory.
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HL weighs in on Burberry
George Salmon at Hargreaves Lansdown commented in a note yesterday that Burberry’s chief executive Marco Gobbetti was focused on consolidating the retailer’s position “at the very top of the value chain”.
“That will take time, but if it can be done the rewards are considerable,” the analyst explained, adding that “luxury consumers prepared to pay handsomely for that special item, high margins and impressive cash generation are both possible”.
Salmon reckons that these features, along with “a balance sheet packed with cash mean the dividend, which offers a prospective yield of 2.6 percent next year, should still grow through the transformation – but as ever there are no guarantees”.
Other analysts on retailer
Citywire meanwhile quoted Richard Hunter at Interactive Investor as commenting that Burberry’s dividend yield of 2.3 percent was “not of particular attraction, and while there are clear objectives in mind on the company’s rebrand, this has yet to filter through to the numbers in any meaningful way”.
“Although more recently the share price has been under pressure […],the picture over the last year is much brighter,” the analyst continued. “Given the outperformance and while investors await further details on the transformation plan, the shares are being seen as up with events.”
As of 08:11 GMT, Thursday, 24 January, Burberry Group plc share price is 1,828.00p.