BURBERRY

Analysis before buying or selling Burberry shares

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Before you embark on a strategy to buy Burberry stock or add it to your portfolio, we recommend that you take the time to learn more about the stock. In this article, we will explain how to perform a fundamental analysis of this stock using the most influential elements of this sector and we will also provide you with other data about this company including its main activities and sources of revenue, its direct competitors in the market and its recent strategic partnerships

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ISIN code: GB0031743007

Ticker: LON: BRBY

Index or market: FTSE 100

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Elements to consider before selling or buying Burberry shares

Analysis N°1

In particular, Burberry's collaborations with other brands should be looked at with the aim of offering more affordable ranges of clothing and accessories and reaching a wider audience.

Analysis N°2

The investments made in communication and marketing can also be interesting with fashion shows or other international events.

Analysis N°3

It is also important to follow Burberry's international expansion strategy with an increase in its presence in various international hubs and particularly in certain emerging markets.

Analysis N°4

The improvements made to the group's online sales section may also enable it to target a wider clientele and we will therefore be interested in the new developments in this area.

Analysis N°5

Of course, we will have to keep an eye on the competition from both the other big groups in the luxury sector, but also from the more popular and less expensive brands.

Analysis N°6

Taxation, which is relatively high in this industry, and its changes, may impact Burberry's profitability results.

Analysis N°7

Finally, you should follow the company's key financial figures and their evolution, including the amount of the dividend, the net income and the annual cash flow.

Analysis before buying or selling Burberry shares

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General presentation of Burberry

Now let's take a look at the Burberry Group and its various businesses and revenue streams. This will give you a better understanding of how the group makes profits and what its future challenges are.

The Burberry Group Plc is a British company that operates in the luxury sector. More specifically, the group specializes in the design, production and sale of high-end fashion clothing and accessories.

To better understand the activities of this company, it is possible to divide them into several divisions according to the share of turnover they generate and in this way:

Firstly, the majority of the Group's revenue, 81.4%, is derived from the retail distribution of the Group's products. This business is currently conducted through a network of 459 outlets or stores which are split between directly owned stores with 214 Burberry brands, 145 concession stores, 44 franchise stores and 56 other types of stores.
The second largest business and group in terms of revenue is wholesale distribution, which generates 16.9% of sales.
Finally, the remaining 1.7% of the group's turnover comes from sales under licence.

Apart from sales under licence, the breakdown of the group's turnover by product family is primarily accessories (36.5%), menswear (28.9%), womenswear (28.3%) and children's wear (6.3%).

It is also important to know the geographical distribution of Burberry's revenues, which currently generates 27.2% of its sales in Europe, the Middle East and Africa, 52.2% in Asia Pacific and 20.6% in the Americas.

Photo credits: ©krasnevsky/123RF.COM

The major competitors of Burberry

Here we take a closer look at who the main rivals are in the Burberry Group's industry, with its three main competitors currently leading the global luxury goods industry.

Kering

First of all, the Kering group, which was formerly the PPR group for Pinault Printemps Redoute, is a French group in the luxury sector which owns several brands in competition with Burberry, including Gucci, Yves Saint-Laurent, Bottega Veneta, Balenciaga, Boucheron and Alexander McQueen. The group went public in 1988 and joined the CAC 40 stock market index in 1995. In 2013, the PPR group changed its name to Kering.

LVMH

Another French luxury group is also a direct competitor of Burberry. This is the LVMH group for Moët Hennessy Louis Vuitton SE which is a French group of companies and one of the leaders in the luxury industry worldwide in terms of turnover. It was created in 1987 through the merger of the companies Moët Hennessy and Louis Vuitton. Its main shareholder is currently the Arnault group through the Christian Dior holding company. LVMH is the world's leading luxury goods company with almost 70 brands, including wine and spirits brands such as Château d'Yquem, Moët & Chandon, Veuve Cliquot, Krug, Hennessy and Glecnmorangie. It is also positioned in the fashion and jewellery segment with the brands Louis Vuitton, Dior, Givenchy, Céline, Kenzo, Fendi, Guerlain, Marc Jacobs, Chaumet; Thomas Pink, Tiffany & Co and Bulgari. He is also active in the media sector with Les Echos, Le Parisien and Radio Classique, and in the retail sector with the Sephora and Le Bon Marché brands. He also owns the Cheval Blanc Courchevel and Belmond hotel groups.

Hermès International

Finally, the third major competitor of the Burberry group is the Hermès Paris group which is a French company specializing in the design, production and sale of luxury goods in the fields of leather goods, ready-to-wear, perfumery, watches, home, lifestyle and tableware. The company was founded in 1837 by Thierry Hermès and was formerly a harness and saddle manufacturer. It is largely owned by the Hermès family, whose fortune is estimated at €39,600 million.

The major partners of Burberry

It goes without saying that the Burberry group does not only have enemies in its sector of activity and can also count on the support of various strategic allies. Indeed, the group regularly sets up partnerships with other groups, as in the following two examples:

Goat

First and foremost and in 2020, the Burberry group has notably set up a partnership with the distributor Goat. This exclusive partnership aims to make the group's new Arthur sneaker model available on Goat. Remember that this online platform specializing in sneakers had already worked with other major luxury brands including Chloe, McQ or Versace. The Arthur sneakers were created by Riccardo Tisci as an exclusive model for Burberry in reference to the British maritime heritage with a contemporary streetwear look.

Tencent

Earlier i.e. in 2019, it was with the Chinese internet giant, Tencent, that Burberry launched a strategic partnership aimed at expanding its retail sales in China. The association of the two companies has thus resulted in a pioneering concept that combines social media and retail with the aim of creating online and offline spaces and getting customers to engage, share and buy.

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Frequently Asked Questions

How and where can I buy Burberry Group shares?

It is now possible to buy shares in Burberry Group through a traditional stock market product such as a PEA or a securities account and through an online broker. But there are also other ways to speculate on this relatively expensive stock without having to buy it. For example, you can use derivatives such as CFDs or contracts for difference which are offered by online brokers.

What are the future trends in Burberry's share price?

It is not possible to know precisely what the next trends of the Burberry share price will be. But you have the possibility of carrying out various analyses to try to obtain signals on this value as a technical analysis which will be based on the study of the stock exchange charts and indicators and the fundamental analysis of which we spoke to you in this article and which is based on the news and publications.

Who are the current major shareholders of the Burberry Group?

At present, Burberry Group's shareholder base is made up in part of a few large shareholders including Lindsell Train with 5.42% of the shares, MFS Investment Management with 5.10%, Baillie Gifford with 4.99%, Schroder Investment Management with 4.49%, The Vanguard Group with 2.75%, BlackRock Fund Advisors with 2.55%, Thornburg Investment Management with 2.49%, BlackRock Investment Management with 2.28%, and Norges Bank Investment Management with 2.23%.

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