18th October 2013
Despite losing its much admired chief executive, stockbrokers are tipping fashion house Burberry as a share to snap up as a change in strategy and a rising consumer base boosts its appeal writes Philip Scott.
Famous for its distinctive check design, the FTSE 100 listed firm has witnessed its stock soar by some 27% over the past year and by 17% in just the last six months.
Broker consensus across share hub, Digital Look has the business pointing towards a ‘buy’, while The Share Centre is recommending the stock as a firm ‘buy’ for medium risk investors looking for capital growth.
The loss of CEO Angela Arendts, to technology giant Apple is not great news for the group. Arendts has often been credited as the person responsible for turning Burberry’s fortune’s around.
Her replacement, the Yorkshire born Christopher Bailey, while lauded for his fashion designs, is untested in business leadership and the share price dipped following the news that he was taking over.
But the firm is in a strong position to benefit from the increasing numbers of middle class consumers in the emerging world and the company has a good online platform.
Helal Miah, investment research analyst at The Share Centre says: “The resulting dip in the share price certainly makes the company look less expensive on a price to earnings basis and more in line with the sector average.”
“Burberry has changed its strategy, becoming less reliant on discounts at department stores, in favour of fully priced merchandise. The idea is to improve the exclusivity of the Burberry brand and so far it seems to be step in the right direction as recent trading updates have shown good company performance against a backdrop of a weak economic environment.
“It is continuously growing like for like sales as well as maintaining a good rate of new store opening in key cities around the world.”