Despite the general economic downturn, demand for luxury fashion has continued to remain robust in the third quarter, with various luxury fashion companies reporting positive demand trends. One company yet to report is Burberry (LON: BRBY), which is set to release its half-year results on November 17.
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While lower-end retailers such as Boohoo and Asos have suffered due to the cost of living crisis and supply chain issues, luxury brands such as Watches of Switzerland and Moncler have posted strong sales results, boding well ahead of Burberry’s scheduled release. Deutsche Bank recently said there was a “glaring discrepancy between luxury and retail.
However, Covid lockdowns in China have impacted the company, despite the more recent positive signs regarding the restrictions in the country.
In its first quarter trading update, Burberry said it continues to target high-single-digit revenue growth and 20% margins in the medium term. In addition, the company said that at the time that while the macroeconomic environment created some near-term uncertainty, its performance in Mainland China was encouraging, and based on the effective FX rates as of July 11, it expected a currency tailwind of around £190m on revenue and £90m adjusted operating profit in FY23.
Burberry shares, despite dipping in the early part of the year, are now on a bullish run, up over 7% in 2022, gaining over 24% in the last six months.
According to TipRanks data, out of 11 analyst ratings, three have Burberry at a Buy, while eight have the stock at Hold, with none at Sell. The average price target is 1,953.91p per share.
