How will Burberrys share price fare post Q4 results
Share price rally has stalled, will results help the stock out of its range?
Share this:
When:
Friday 22nd May
Friday 22nd May
What to expect ?
To say its been a turbulent year for the luxury retailer would be an understatement. With the US – Sino trade war, Hong Kong protests and now covid-19 to deal with, we can expect the results to reflect this.That said, Burberry’s behaviour through lockdown paints a picture of a company with financial resilience. Burberry has donated 100,000 PPE items to NHS, provided a base line salary for all UK workers who can’t work from home without government support, whilst senior staff have taken a 20% pay cut.
Retail sales slump
Retailers doors remain firmly shut in Europe and US owing to the coronavirus outbreak. Demand for luxury goods has also evaporated. The fact that Burberry has retooled a factory for PPE suggests that they don’t expect demand to pick up anytime soon.
According to the Office of National Statistics retail sales slumped by 5.1% in March, in the biggest decline in sales in the series 23-year history. Expectations are that retail sales in April will be even weaker as lockdown measures caused demand to vanish.
In late March Burberry released an update warning that it expected a 70% - 80% fall in sales in the final two weeks of March owing to coronavirus temporary store closures. Burberry also said that it expected this deep decline to result in a 30% fall in overall Q4 sales. After the firm quantified the expected hit to sales, the share price started to rise. There is nothing traders hate more than the unknown
Asia - China
Its impossible to look at Burberry without looking at China. China’s sales account for around 40% of total sales for Burberry. Hong Kong protests feel like an eternity ago, but they will have had an impact on sales as will the coronavirus lockdown in China at the start of the year.
Store in Asia are starting to reopen. Investors will be keen to hear how the reopening has been going in an attempt to gauge what can be expected from Europe and the US as lockdown measures are eased and stores reopen. According to China Luxury Advisors an independent consultancy, luxury consumer confidence is still down.
Its impossible to look at Burberry without looking at China. China’s sales account for around 40% of total sales for Burberry. Hong Kong protests feel like an eternity ago, but they will have had an impact on sales as will the coronavirus lockdown in China at the start of the year.
Store in Asia are starting to reopen. Investors will be keen to hear how the reopening has been going in an attempt to gauge what can be expected from Europe and the US as lockdown measures are eased and stores reopen. According to China Luxury Advisors an independent consultancy, luxury consumer confidence is still down.
Online Sales
Internet sales will also be closely eyed. These will give an idea as to whether customers shopping habits shifted to the internet during the lockdown or whether consumer decided to hold off from luxury purchases altogether.
Internet sales will also be closely eyed. These will give an idea as to whether customers shopping habits shifted to the internet during the lockdown or whether consumer decided to hold off from luxury purchases altogether.
Recession
It is also worth considering that the UK, Europe and the US are all heading towards a recession of historic proportions. Luxury items are unlikely to be top of many people’s shopping lists until there is more clarity over the economic outlook and until they have more job security. A quick rebound appears to be off the cards.
It is also worth considering that the UK, Europe and the US are all heading towards a recession of historic proportions. Luxury items are unlikely to be top of many people’s shopping lists until there is more clarity over the economic outlook and until they have more job security. A quick rebound appears to be off the cards.
Strong brands the other side
Research has indicted that those firms with a strong brand tend to recover more quickly from economic downturn. This is because in times of turmoil, those competitors with weaker brand cut advertising spend, reducing brand awareness There is no denying that Burberry has a very strong recognisable brand and given the challenging outlook, Burberry’s brand should work in its favour versus competitors.
Research has indicted that those firms with a strong brand tend to recover more quickly from economic downturn. This is because in times of turmoil, those competitors with weaker brand cut advertising spend, reducing brand awareness There is no denying that Burberry has a very strong recognisable brand and given the challenging outlook, Burberry’s brand should work in its favour versus competitors.
Chart thoughts
After picking up from the March low, Burberry’s recover stalled in early April. The stock has been trading within a familiar range of 1250p – 1500p for the past 6 weeks. It trades just marginally above its 20 & 50 sma on the 4 hour charts.
Even if results do disappoint, a break below 1250p would be need for a more convincing move southwards.
When:
Friday 22nd May
Friday 22nd May
What to expect ?
To say its been a turbulent year for the luxury retailer would be an understatement. With the US – Sino trade war, Hong Kong protests and now covid-19 to deal with, we can expect the results to reflect this.That said, Burberry’s behaviour through lockdown paints a picture of a company with financial resilience. Burberry has donated 100,000 PPE items to NHS, provided a base line salary for all UK workers who can’t work from home without government support, whilst senior staff have taken a 20% pay cut.
Retail sales slump
Retailers doors remain firmly shut in Europe and US owing to the coronavirus outbreak. Demand for luxury goods has also evaporated. The fact that Burberry has retooled a factory for PPE suggests that they don’t expect demand to pick up anytime soon.
According to the Office of National Statistics retail sales slumped by 5.1% in March, in the biggest decline in sales in the series 23-year history. Expectations are that retail sales in April will be even weaker as lockdown measures caused demand to vanish.
In late March Burberry released an update warning that it expected a 70% - 80% fall in sales in the final two weeks of March owing to coronavirus temporary store closures. Burberry also said that it expected this deep decline to result in a 30% fall in overall Q4 sales. After the firm quantified the expected hit to sales, the share price started to rise. There is nothing traders hate more than the unknown
Asia - China
Its impossible to look at Burberry without looking at China. China’s sales account for around 40% of total sales for Burberry. Hong Kong protests feel like an eternity ago, but they will have had an impact on sales as will the coronavirus lockdown in China at the start of the year.
Store in Asia are starting to reopen. Investors will be keen to hear how the reopening has been going in an attempt to gauge what can be expected from Europe and the US as lockdown measures are eased and stores reopen. According to China Luxury Advisors an independent consultancy, luxury consumer confidence is still down.
Its impossible to look at Burberry without looking at China. China’s sales account for around 40% of total sales for Burberry. Hong Kong protests feel like an eternity ago, but they will have had an impact on sales as will the coronavirus lockdown in China at the start of the year.
Store in Asia are starting to reopen. Investors will be keen to hear how the reopening has been going in an attempt to gauge what can be expected from Europe and the US as lockdown measures are eased and stores reopen. According to China Luxury Advisors an independent consultancy, luxury consumer confidence is still down.
Online Sales
Internet sales will also be closely eyed. These will give an idea as to whether customers shopping habits shifted to the internet during the lockdown or whether consumer decided to hold off from luxury purchases altogether.
Internet sales will also be closely eyed. These will give an idea as to whether customers shopping habits shifted to the internet during the lockdown or whether consumer decided to hold off from luxury purchases altogether.
Recession
It is also worth considering that the UK, Europe and the US are all heading towards a recession of historic proportions. Luxury items are unlikely to be top of many people’s shopping lists until there is more clarity over the economic outlook and until they have more job security. A quick rebound appears to be off the cards.
It is also worth considering that the UK, Europe and the US are all heading towards a recession of historic proportions. Luxury items are unlikely to be top of many people’s shopping lists until there is more clarity over the economic outlook and until they have more job security. A quick rebound appears to be off the cards.
Strong brands the other side
Research has indicted that those firms with a strong brand tend to recover more quickly from economic downturn. This is because in times of turmoil, those competitors with weaker brand cut advertising spend, reducing brand awareness There is no denying that Burberry has a very strong recognisable brand and given the challenging outlook, Burberry’s brand should work in its favour versus competitors.
Research has indicted that those firms with a strong brand tend to recover more quickly from economic downturn. This is because in times of turmoil, those competitors with weaker brand cut advertising spend, reducing brand awareness There is no denying that Burberry has a very strong recognisable brand and given the challenging outlook, Burberry’s brand should work in its favour versus competitors.
Chart thoughts
After picking up from the March low, Burberry’s recover stalled in early April. The stock has been trading within a familiar range of 1250p – 1500p for the past 6 weeks. It trades just marginally above its 20 & 50 sma on the 4 hour charts.
Even if results do disappoint, a break below 1250p would be need for a more convincing move southwards.
Related tags:
Open an account in minutes
Experience award-winning platforms with fast and secure execution, and enjoy tight spreads from 0.5 pts on FX and 0.3 pts on indices.
Economic calendar
Web Trader platform
Our sophisticated web-based platform is packed with features.
Related articles
This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.
StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.
In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.
StoneX Financial Pte. Ltd. is not under any obligation to update this report.
Trading CFDs carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.forex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.