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Why the party's over for Burberry and fashion
As Burberry reports half-year results, Saxo Bank’s Peter Garnry says that from an investment point of view, “the party is over” for the UK’s largest luxury-goods maker - and as a matter of fact for the fashion industry as a whole.
He explains that investors have missed the boat when it comes to investing in the firm: “Burberry got the online concept completely right and they had a phenomenal strategy in Asia, but this strategy is now declining so you see growth rates coming down. We think there are better opportunities out there than chasing Burberry.”
The London-based fashion house announced adjusted pre-tax profit for the six months to 30 September of GBP 173.9 million, compared with GBP 173.4 million a year earlier. Last month, it named Christopher Bailey to succeed Angela Ahrendts as chief executive officer when she leaves for Apple.
There has been a lot of buzz around Bailey’s appointment, but Peter remains relatively unimpressed: “A CEO is not the whole company, they can direct a strategy but a big company like Burberry has thousands of employees who do the day-to-day job, so we think Burberry will continue along the lines of where it has been.”
Peter also remains negative about the fashion industry as a whole: “The European Fashion Index outperformed the market in 2010, 2011 and 2012 – but in 2013 they have actually underperformed by 5%. Fashion will probably begin to perform on par with the general market, and as such it’s not interesting anymore.”
01:50 minutes
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