Burberry shares slip after downgrade
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.