• Home
  • V1
  • Design
  • LVMH & Burberry build up momentum

LVMH & Burberry build up momentum

By FashionUnited

loading...

Scroll down to read more

European shares fell for a third consecutive session

on Tuesday as weak German data and a gloomy update from luxury group LVMH, which raised concerns amongst those companies posting results this week. Burberry also had the industry talking, ahead of its trading update to be released Wednesday.

Luxury goods companies traded low and fell 1.6 percent after LVMH's first-quarter update dented sentiment in the sector, reported Reuters. The French giant's shares dropped 3.8 percent and dragged Burberry and Richemont down 1.4 percent and 0.3 percent, respectively.

Burberry had the industry talking, especially after LVMH's blue figures, as the British fashion mogul will release a trading update for the first half of the year on Wednesday. Its luxury peers are watching these results as a sign of what's on for the sector in the coming months.

As published in ‘IFA Magazine’, Burberry is expected to show a slump in sales performance when it releases its trading update, with analysts at Nomura expect Wednesday’s update to show the sales performance has slowed since the Christmas season. They forecast fourth quarter sales growth to drop to 3 percent, with an additional 8 percent contribution from new space.

However, Nomura analysts pointed out that this year will be a “key year for Burberry”, with management changes and its new beauty product division.

Meanwhile and still in London, Associated British Foods, the parent group to affordable clothing chain Primark, was among the FTSE 100’s heaviest fallers after analysts soured trader enthusiasm for the group, highlighted ´The Telegraph´. Credit Suisse flagged the fact “that the market had a tendency to expect perhaps too much from the company - saw the stock come under pressure and lose 34 pence to 18.30 pounds.”

“It is very easy to get carried away with ABF estimates,” analysts at the Swiss bank added, stressing as well that “forecasts can get out of hand”. This way, the Swiss investment bank remains cautious and suggested that it is not likely that the company meets market’s expectations.

Noteworthy though that Primark has seen shares in ABF surge 65 percent since the start of 2012, hitting historic record heights.
FashionUnited