Burberry shares up 8% in early morning trading
Burberry has said it expects its full-year profits to exceed expectations following a resurgence in its sales over recent months.
In an impromptu trading update on Friday the luxury brand confirmed its same-store retail sales are expected to be between 28% and 32% higher compared to the year prior.
Burberry also confirmed it anticipates its full-year revenue to fall between 10% and 11%. Analysts forecasted a 13% decline at constant exchange rates. The FTSE 100 company’s operating margin is expected to come in around 16%, higher than the margin implied by forecasts.
Shares in the FTSE 100 company were up over 8 per cent in early London trading.
Russ Mould, investment director at AJ Bell, suggested the business will pick up further when international travel resumes.
“Burberry has been strutting down the catwalk with quite a pose since the latter part of 2020 as its earnings recovery takes shape. Its latest update shows that trading is better than expected which is impressive given that this is likely to be just the first stage in a multi-phase bounce back,” Mould said.
“A lot of its business has historically come from Asian tourists taking trips across Europe. They like to spend big and its products are highly desirable. The restrictions on international travel are only in the nascent stages of being lifted and the return of tourist-related sales may not pick up in earnest until 2022.”
Mould also feels that Burberry could be benefit from a Roaring Twenties like economic boom.
“Therefore, current sales are likely to be driven by domestic customers. In January it flagged good full-price sales in places like the Americas, mainland China and Korea.”
“As more regions start to come out of lockdown restrictions, there is a sense that we could see a huge spending spree as a lot of people fortunate to have been working throughout the pandemic may have amassed considerable spare cash.”
“The idea that we could see the Roaring Twenties is very real and luxury goods companies such as Burberry could be major beneficiaries.”
