The Burberry share price soars 15% after today’s results – is there more to come?

Harvey Jones is thrilled by the stellar performance of the Burberry share price this morning. This puts the lid on a brilliant recovery but can the fun continue?

| More on:

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Burberry (LSE: BRBY) share price has been through hell in recent years. Now it’s back with a vengeance.

I pored over this morning’s (24 January) Q3 results, which include the crucial Christmas trading period, wondering how investors would respond. 

Would they take flight at the 7% year-on-year drop in retail revenues to £659m? Or view that as progress following a 22% sales first-half slump?

Comparable store sales fell by just 4% in Q3, compared with a 20% drop in the first half. That’s progress of sorts but they’re still falling.

Can the FTSE 250 stock carry on with its recovery?

I also wondered whether markets would swallow CEO Joshua Schulman’s claim today that his strategic plan “will improve our performance and drive long-term value creation”.

In the group’s last set of results, published on 14 November, investors swung behind the new broom. Burberry shares jumped 17% as Schulman unveiled his ‘Burberry forward’ plan by targeting £40m in savings and “reconnecting our brand with its original purpose”.

The more I looked at today’s report, the more optimistic I felt. Especially with Schulman stating that “it is now more likely our second-half results will broadly offset the first-half adjusted operating loss”.

In November, Burberry said it was too early to tell whether the second half would fully offset the first half on a bottom-line basis. So that’s progress too. I anticipated another jump in the stock and boy, did we get it.

As I write, it’s up 15% and I’m a happy chap because Burberry was my biggest loser last year, leaving me with a 40% paper loss at one point. That’s despite buying the shares after the first of several profit warnings, and averaging down with each subsequent slice of bad news.

The rally began in November and the shares are now up 50% in the last three months. Although they’re still down around 14% over one year (and 55% over two).

As well as celebrating the recovery, I’m kicking myself for not buying even more when Burberry was down. Although I’ve learned that it’s almost impossible to call the very bottom of the market, or an individual stock.

This growth stock is back in play

So today, I’ll take the win and look forward to a brighter 2025. I already have a big stake in Burberry, so won’t buy more. I can see why other investors would consider doing so. But I’d take my time, personally, and beware profit takers. Stocks have a habit of retreating after a big early morning jump like this one. Also, the stock isn’t as cheap as it was, trading at 14.5 times earnings.

Also with the global economy still struggling, we can’t assume the consumers have got their taste for luxury back. China is a particular worry as its economy resists attempts to get it moving again.

The US is in a more optimistic mood, but then we have Donald Trump’s trade tariffs to worry about. Burberry would be right in the firing line, should we get them.

Also, markets are putting a lot of faith in Shulman’s words, but as he admits himself, “it is still very early in our transformation and there remains much to do”. Enough of that. Let’s enjoy today. Burberry is back on track and these things can be infectious. Bring it on!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Harvey Jones has positions in Burberry Group Plc. The Motley Fool UK has recommended Burberry Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

2 UK shares that could soar if interest rates sprint lower!

The Bank of England's latest meeting has fed speculation of swingeing interest rate cuts. I think these UK shares could…

Read more »

Shot of a senior man drinking coffee and looking thoughtfully out of a window
Investing Articles

My favourite FTSE dividend stock just jumped 17%! So why am I sad?

This investor has mixed feelings today as a quality dividend stock from the FTSE 250 surged higher in his portfolio.…

Read more »

Investing Articles

Here’s why AstraZeneca stock jumped nearly 6% in the FTSE 100 today

FTSE 100 heavyweight AstraZeneca helped propel the blue-chip index to a record high today. Here's what investors were cheering.

Read more »

Closeup of "interest rates" text in a newspaper
Investing Articles

Interest rates fall again! Here are 3 FTSE dividend growth shares to consider buying

As interest on cash savings becomes increasingly less attractive, Paul Summers has been looking at dividend growth shares for passive…

Read more »

Investing Articles

Up 10% today, I think this FTSE 250 growth share could continue to surge!

Babcock International's flying after upgrading its full-year forecasts. I think the FTSE 250 defence share might just be getting started.

Read more »

Investing Articles

The AstraZeneca share price jumps 5% on today’s strong results – but is it too expensive?

Harvey Jones hails the brilliant long-term performance of the AstraZeneca share price, but wonders whether the FTSE 100's biggest company…

Read more »

Investing Articles

Is this my chance to buy Alphabet shares?

A big step up in AI spending at Google has investors nervous, but has it created an opportunity to buy…

Read more »

Senior woman potting plant in garden at home
Investing Articles

£10k in savings? Here’s how an investor could aim for a monthly second income of £1,200

Mark David Hartley considers how investors could build towards an early retirement plan with a second income from a portfolio…

Read more »