Latest news with #BurberryGroupPlc
Business of Fashion
6 days ago
- Business
- Business of Fashion
Luxury's Gulf Between Winners and Losers Is Widening
For Europe's luxury stocks, this earnings season will hammer home the widening gulf between the winners and the losers. The industry got off to a promising start with robust earnings from British trenchcoat maker Burberry Group Plc that sent its stock up as much as 9 percent and better-than-expected sales at Cartier owner Richemont. But upcoming reports from LVMH Moët Hennessy Louis Vuitton SE, Kering SA and Salvatore Ferragamo SpA look less promising. If sales at these companies undershoot already weak forecasts, the shares may extend this year's drop that has wiped out market value of as much as €175 billion ($205 billion). While the outlook for luxury shares is crucial for Europe's stalled equity market rally given the weight of these companies, investors have to be more selective about the stocks they pick. This gap has been widening as a web of ailing China demand, varying brand perception, a weaker dollar and high valuations impacts these companies differently. The season will be critical to determining the outperformers and laggards, with analysts expecting very wide revenue growth outcomes. 'It's not going to be one-tide-lifts-all-boats for the sector,' said Stefan-Guenter Bauknecht, a senior portfolio manager at DWS. 'It really depends on the category and how the brand is perceived in the category. And the VIP certainly helps.' One striking example of the sector's divide is LVMH versus French peer Hermès International SCA. Sales at LVMH's key Fashion & Leather Goods division are expected to have dropped 7.8 percent in the second quarter, according to analyst estimates. The company reports after the bell on Thursday. Hermes, which has been an example of how companies can thrive on selling the highest-end items, is expected to report revenue growth of 12 percent at its leather goods division. Its results are due on July 30. In the case of the Louis Vuitton and Tiffany & Co. owner, the stock has lost roughly half of its value over the past two years, losing its crown of Europe's biggest stock, with investors increasingly worried about an unprecedented demand slump in China. Hermes shares, on the other hand, are weathering the broader industry pullback. After a 160 percent jump since the end of 2020, the stock is little changed this year versus a 7 percent drop in Goldman Sachs Group Inc.'s basket of luxury shares. In the current economic context, pricing power is critical, said Helen Jewell, Europe, Middle East and Africa chief investment officer at BlackRock Fundamental Equities. 'The challenge for investors has been some of the names that we thought had greater brand strength, and it turned out they actually didn't,' she said, adding that there could be some buying opportunities after the selloff in the sector 'but you do need to be selective.' For the sector as a whole, the difference is stark between now and the 2021 to 2023 boom times, when investors were rushing to snap up any European luxury shares as they reaped the profits from shoppers on a post-pandemic spending spree. But with China's sluggish economy putting a dent into demand for pricey handbags and watches, investors are buying shares in the brands that can captivate consumers and selling the ones that can't. Among this year's winners, shares in Burberry have surged more than 30 percent. The UK fashion brand is gaining traction with its turnaround plan and winning new customers through its outwear push. To some investors, luxury valuations are still too high overall even after this year's plunge in a number of stocks. The industry has an average forward price-earnings ratio of 27, according to data compiled by Bloomberg. That's a near 85 percent premium to the broader market and above the long-term premium from the past 10 years. 'This is a sector that is fully exposed to tariffs and fully exposed to the weaker dollar,' said Roland Kaloyan, head of European equity strategy at Societe Generale SA. 'It's going to be quite difficult, so I stick to my underweight.' By Sagarika Jaisinghani, Michael Msika, Julien Ponthus Learn more: Opinion: When Will Luxury's Perfect Storm Pass? The luxury sector is probably closer to the end of the storm than the beginning, but many valuations are pricing in the worst, writes Andrea Felsted.
Fashion Network
7 days ago
- Business
- Fashion Network
Luxury's split between winners and losers is only getting wider
For Europe's luxury stocks, this earnings season will hammer home the widening gulf between the winners and the losers. The industry got off to a promising start with robust earnings from British trench coat maker Burberry Group Plc that sent its stock up as much as 9% and better-than-expected sales at Cartier owner Richemont. But upcoming reports from LVMH Moët Hennessy Louis Vuitton SE, Kering SA and Salvatore Ferragamo SpA look less promising. If sales at these companies undershoot already weak forecasts, the shares may extend this year's drop that has wiped out market value of as much as 175 billion euros (205 billion dollars). While the outlook for luxury shares is crucial for Europe's stalled equity market rally given the weight of these companies, investors have to be more selective about the stocks they pick. 'It's not going to be one-tide-lifts-all-boats for the sector,' said Stefan-Guenter Bauknecht, a senior portfolio manager at DWS. 'It really depends on the category and how the brand is perceived in the category. And the VIP certainly helps.' One striking example of the sector's divide is LVMH versus French peer Hermes International SCA. Sales at LVMH's key Fashion & Leather Goods division are expected to have dropped 7.8% in the second quarter, according to analyst estimates. The company reports after the bell on Thursday. Hermes, which has been an example of how companies can thrive on selling the highest-end items, is expected to report revenue growth of 12% at its leather goods division. Its results are due on July 30. In the case of the Louis Vuitton and Tiffany & Co. owner, the stock has lost roughly half of its value over the past two years, losing its crown of Europe's biggest stock, with investors increasingly worried about an unprecedented demand slump in China. Hermes shares, on the other hand, are weathering the broader industry pullback. After a 160% jump since the end of 2020, the stock is little changed this year versus a 7% drop in Goldman Sachs Group Inc.'s basket of luxury shares. In the current economic context, pricing power is critical, said Helen Jewell, Europe, Middle East and Africa chief investment officer at BlackRock Fundamental Equities. 'The challenge for investors has been some of the names that we thought had greater brand strength, and it turned out they actually didn't,' she said, adding that there could be some buying opportunities after the selloff in the sector 'but you do need to be selective.' For the sector as a whole, the difference is stark between now and the 2021 to 2023 boom times, when investors were rushing to snap up any European luxury shares as they reaped the profits from shoppers on a post-pandemic spending spree. But with China's sluggish economy putting a dent into demand for pricey handbags and watches, investors are buying shares in the brands that can captivate consumers and selling the ones that can't. Among this year's winners, shares in Burberry have surged more than 30%. The UK fashion brand is gaining traction with its turnaround plan and winning new customers through its outwear push. To some investors, luxury valuations are still too high overall even after this year's plunge in a number of stocks. The industry has an average forward price-earnings ratio of 27, according to data compiled by Bloomberg. That's a near 85% premium to the broader market and above the long-term premium from the past 10 years. 'This is a sector that is fully exposed to tariffs and fully exposed to the weaker dollar,' said Roland Kaloyan, head of European equity strategy at Societe Generale SA. 'It's going to be quite difficult, so I stick to my underweight.'
Fashion Network
23-07-2025
- Business
- Fashion Network
Luxury's split between winners and losers is only getting wider
For Europe's luxury stocks, this earnings season will hammer home the widening gulf between the winners and the losers. The industry got off to a promising start with robust earnings from British trench coat maker Burberry Group Plc that sent its stock up as much as 9% and better-than-expected sales at Cartier owner Richemont. But upcoming reports from LVMH Moët Hennessy Louis Vuitton SE, Kering SA and Salvatore Ferragamo SpA look less promising. If sales at these companies undershoot already weak forecasts, the shares may extend this year's drop that has wiped out market value of as much as 175 billion euros (205 billion dollars). While the outlook for luxury shares is crucial for Europe's stalled equity market rally given the weight of these companies, investors have to be more selective about the stocks they pick. 'It's not going to be one-tide-lifts-all-boats for the sector,' said Stefan-Guenter Bauknecht, a senior portfolio manager at DWS. 'It really depends on the category and how the brand is perceived in the category. And the VIP certainly helps.' One striking example of the sector's divide is LVMH versus French peer Hermes International SCA. Sales at LVMH's key Fashion & Leather Goods division are expected to have dropped 7.8% in the second quarter, according to analyst estimates. The company reports after the bell on Thursday. Hermes, which has been an example of how companies can thrive on selling the highest-end items, is expected to report revenue growth of 12% at its leather goods division. Its results are due on July 30. In the case of the Louis Vuitton and Tiffany & Co. owner, the stock has lost roughly half of its value over the past two years, losing its crown of Europe's biggest stock, with investors increasingly worried about an unprecedented demand slump in China. Hermes shares, on the other hand, are weathering the broader industry pullback. After a 160% jump since the end of 2020, the stock is little changed this year versus a 7% drop in Goldman Sachs Group Inc.'s basket of luxury shares. In the current economic context, pricing power is critical, said Helen Jewell, Europe, Middle East and Africa chief investment officer at BlackRock Fundamental Equities. 'The challenge for investors has been some of the names that we thought had greater brand strength, and it turned out they actually didn't,' she said, adding that there could be some buying opportunities after the selloff in the sector 'but you do need to be selective.' For the sector as a whole, the difference is stark between now and the 2021 to 2023 boom times, when investors were rushing to snap up any European luxury shares as they reaped the profits from shoppers on a post-pandemic spending spree. But with China's sluggish economy putting a dent into demand for pricey handbags and watches, investors are buying shares in the brands that can captivate consumers and selling the ones that can't. Among this year's winners, shares in Burberry have surged more than 30%. The UK fashion brand is gaining traction with its turnaround plan and winning new customers through its outwear push. To some investors, luxury valuations are still too high overall even after this year's plunge in a number of stocks. The industry has an average forward price-earnings ratio of 27, according to data compiled by Bloomberg. That's a near 85% premium to the broader market and above the long-term premium from the past 10 years. 'This is a sector that is fully exposed to tariffs and fully exposed to the weaker dollar,' said Roland Kaloyan, head of European equity strategy at Societe Generale SA. 'It's going to be quite difficult, so I stick to my underweight.'
Fibre2Fashion
18-07-2025
- Business
- Fibre2Fashion
UK's Burberry sees sequential sales recovery despite Q1 revenue dip
British luxury fashion house Burberry Group Plc has reported a 6 per cent year-over-year (YoY) decline in retail revenue to £433 million (~$580.22 million) in the first quarter (Q1) ended June 28, 2025, down from £458 million in the same period last year. At constant exchange rates (CER), the decline was more modest at 2 per cent, with a 1 per cent dip in comparable store sales and a further 1 per cent drag from store space. However, the brand highlighted signs of early progress in its transformation journey under the Burberry Forward strategy. Comparable retail sales improved sequentially across all regions compared to the previous quarter, supported by increased brand desirability, outperformance in core categories such as outerwear and scarves, and improved customer conversion, Burberry said in a press release. Burberry has reported a 6 per cent YoY drop in Q1 FY26 retail revenue to £433 million (~$580.22 million), though comparable sales fell just 1 per cent. Sequential improvement was seen across regions, led by Americas at 4 per cent and EMEIA at 1 per cent. Key initiatives under its Burberry Forward strategyâ€'including brand campaigns, store upgrades, and cost efficienciesâ€'show early signs of progress. The comparable store sales rose 1 per cent, as strong local spending helped offset weaker tourist demand Europe, Middle East, India and Africa (EMEIA). Americas registered a 4 per cent increase, driven by growth in new customers. Greater China saw sales decline of 5 per cent, with Mainland China down 4 per cent. Asia Pacific saw decrease of 4 per cent due to a challenging performance in Japan, partially balanced by growth in South Korea. Burberry has launched several initiatives during the quarter to reposition the brand and accelerate growth. A series of monthly campaigns—High Summer, Highgrove, and Festival—celebrated British summer traditions while targeting diverse customer segments. The Autumn 2025 collection, rebalanced under the Burberry Forward vision, focused on fewer, iconic pieces that highlight recognisable brand codes. In-store enhancements included updated visual merchandising and the introduction of a scarf bar pilot, which outperformed the broader store fleet, with 200 installations targeted by year-end. The online growth continued for the third consecutive quarter, supported by improved product mix, universal styling, and enhanced storytelling. Organisational changes were implemented to foster collaboration and agility, and the cost efficiency programme remains on track to deliver £80 million in annualised savings by FY26. Burberry acknowledged that the macroeconomic environment remains challenging and reiterated that it is still in the early stages of its business turnaround. The company plans to prioritise investment through the first half of fiscal 2026 (FY26), with an emphasis on reigniting brand desirability—a key driver for future top-line growth. The company aims to deliver margin improvement in FY26 through continued simplification, productivity, and strong cash flow discipline, with a focus on returning to sustainable, profitable growth. The company also introduced a new regional structure in FY26: Greater China included Mainland China, Hong Kong SAR, Macau SAR, and Taiwan; Asia Pacific comprised the rest of Asia including Japan, South Korea, Southeast Asia, Australia, and New Zealand. 'Over the past year, we have moved from stabilising the business to driving Burberry Forward with confidence. The improvement in our first-quarter comparable sales, strength in our core categories, and uptick in brand desirability give us conviction in the path ahead. Our Autumn 2025 collection is being well received by a broad range of luxury customers as it arrives in stores. Although the external environment remains challenging and we are still in the early stages of our transformation, we are encouraged by the initial progress we are starting to see,' said Joshua Schulman, chief executive officer (CEO) at Burberry. Fibre2Fashion News Desk (SG)
Bloomberg
18-07-2025
- Business
- Bloomberg
Burberry Sales Fall Less Than Feared as Turnaround Takes Shape
Burberry's sales fell less than expected, as the UK fashion brand proved resilient with a turnaround under Chief Executive Officer Joshua Schulman. Comparable store sales shrank 1% in the quarter ended June, Burberry Group Plc said in a statement Friday. Analysts had expected a 3.7% drop.
