Burberry shares slip af­ter down­grade

The Daily Telegraph - Business - - Business - TOM REES

BURBERRY fell out of fash­ion with in­vestors af­ter City scrib­blers at Beren­berg be­came the lat­est to urge cau­tion on the lux­ury brand as in­vestors brace for Ric­cardo Tisci’s de­but col­lec­tion to hit stores.

The slow­down in China punc­tured Burberry’s share price mo­men­tum in the sec­ond half of 2018 but Beren­berg shrugged off wor­ries over slow­ing con­sumer de­mand in Asia.

It in­stead warned of the com­pany’s tran­si­tion pe­riod co­in­cid­ing with an un­cer­tain eco­nomic back­drop. Since the be­gin­ning of 2017, a new chief ex­ec­u­tive and chief fi­nan­cial of­fi­cer have joined the FTSE 100 com­pany to steer a bold strat­egy shift to make Burberry an up­mar­ket brand.

An­a­lyst Zuzanna Pusz told clients the im­pact of its new chief creative on sales when his col­lec­tion enters stores in Fe­bru­ary could be “dif­fi­cult to judge”. Mr Tisci’s col­lec­tion was well-re­ceived on the runway but the “deep-rooted tran­si­tion that the busi­ness is un­der­go­ing” ramps up the risks for in­vestors, it said. The Ger­man bank also pre­dicted a flurry of deal mak­ing in the lux­ury sec­tor dur­ing the next 12 months. De­spite predictions of M&A ac­tion in the sec­tor, Beren­berg’s down­grade to “hold” sent Burberry slid­ing 48p to £17.42, push­ing its shares back to­wards a 10-month low.

Else­where, a late come­back on Euro­pean mar­kets helped ex­tend the 2019 stocks rally as the FTSE 100 neared its pre-De­cem­ber rout lev­els.

Since hit­ting a two-and-a-half-year low in late De­cem­ber, the in­dex has clawed back 5.4pc. The FTSE 100 shrugged off wan­ing en­thu­si­asm over US-China trade talks to climb a fur­ther 36.24 points to 6,942.87.

BHP led the de­cline among min­ers as in­vestor op­ti­mism was curbed by the de­tail-light state­ments on the talks from Bei­jing and the Trump ad­min­is­tra­tion. BHP, which also went ex-div­i­dend, sank 90.8p to £16.17 while

Rio Tinto was a heavy weight on the in­dex, edg­ing down 23p to £38.83.

Mer­lin En­ter­tain­ments suf­fered its sharpest fall in three months af­ter UBS slapped a “sell” stamp on the strug­gling Le­goland owner.

Its an­a­lysts cited de­clin­ing cus­tomer re­views at its Mid­way sites, a trend UBS ar­gued could sig­nal that cost­cut­ting is leav­ing the port­fo­lio of at­trac­tions, in­clud­ing Madame Tus­sauds and the London Eye, un­der re­sourced. “We now have greater con­cerns that this trend could be the re­sult of poor in­vest­ment or op­er­a­tional de­ci­sions,” it warned clients as it slashed its 2019 fore­casts. The scathing note knocked Mer­lin down 17.3p, or 5pc, to 327.2p.

Crude min­now Premier Oil hit a seven-week high af­ter cut­ting its debt pile amid record pro­duc­tion fig­ures. Its shares climbed 2.9p to 79p Gam­bling soft­ware developer GAN ral­lied 6.5p to 59.5p, a two-month high, af­ter sign­ing a deal with sports bet­ting com­pany FanDuel to ex­pand their part­ner­ship in the US.

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