Stake disposal takes toll on fashion group

Market report Scott Reid

Burberry’s shares were out of fashion despite the market being on the up after Belgian billionaire Albert Frere sold his stake in the British clothing brand.

Frere offloaded his 6.6 per cent holding in Burberry, which was held through his investment vehicle Groupe Bruxelles Lambert. The group confirmed that it was selling 27.6 million shares for £498 million.

Burberry closed down 6.1 per cent at 1,770p in the wake of the announcement.

Ian Gaillienne and Gerard Lamarche, co-chief executives of Groupe Bruxelles Lambert, said the company was making a capital gain of about £83m from the share sale. The money will be used to diversify the company’s portfolio.

“The proceeds from the disposal will be redeployed into other investments,” they said.

David Madden, market analyst at CMC Markets, said: “[On Tuesday], the stock hit its highest level since November, and it has rallied more than 25 per cent since the lows of February.

“Mr Frere didn’t give a reason for disposing his Burberry shares, but the share price has performed well recently so it might be a matter of getting out during a positive run.”

Imperial Brands shares jumped 6.2 per cent to 2,780p after the tobacco company reported “significant progress” for its portfolio of socalled “next generation products”. The company said it would prioritise the growth of its e-vapour product “blu”, which is currently available in the UK, US, Italy and France.

London’s benchmark FTSE 100 index closed up 96.77 points or 1.3 per cent at 7,662.52 aided by a rally in the price of a barrel of crude oil. Doorstep lender Provident Financial has said it is on the road to recovery after a torrid year of profit warnings and regulatory sanctions. The bakery chain has warned fullyear profits could flat-line after taking a sales hit from the “Beast from the East” and slower spring trading.