Burberry merger rumours dismissed by insiders

LUXURY BRAND Burberry and American firm Coach are not in active merger talks, sources familiar with the matter said, in reaction to a report that suggested the two fashion companies were considering a tie-up.

“This is completely speculative. There are no negotiations underway, Burberry is not talking to Coach,” one of the sources said.

Another source with firsthand knowledge of the matter said such a plan could not be on the cards since the two companies pursued very different strategies.

Burberry

Burberry and Coach shares rose sharply after financial blog Betaville said that Coach was working with investment bank Evercore on a potential merger with Burberry.

Exane BNP Paribas analyst Luca Solca said: “Contrary to Coach, most of the efforts at Burberry in the past 20 years have gone in the direction of elevating the brand and moving it into mega-brand price territory, rather than squarely into accessible luxury. A merger of Coach and Burberry would primarily be a merger of problems.”

He added there are few examples of mergers in the sector that helped a brand regain momentum and drive up sales.

Burberry reported a drop in first-half sales on Tuesday as weak demand from US department stores offset a surge in UK sales as tourists took advantage of the lower pound.

The firm, famous for its Yorkshire-made trench coats, said it remains committed to its £50m investment in a new site in Leeds, although it is looking at the timing.

It was originally due to open in 2019, but asked directly if this time frame is still on track, Burberry’s finance director Carol Fairweather said: “We’ll keep you posted. We are committed to renewing our manufacturing facility in Yorkshire. We are looking at the details, looking at the timing, but our investment in Yorkshire is unchanged.” declined to comment.