FTSE 250 movers: Burberry battered; Bailey boosts Bellway
By Frank Prenesti
Date: Thursday 03 Oct 2024
(Sharecast News) - FTSE 250 (MCX) 20,754.82 -0.14%
Burberry was under the cosh as Stifel cut its price target on the shares to 720p from 800p and reduced its FY25 and FY26 sales forecasts by 8% and 10%, respectively.
Stifel said it was cutting the sales forecasts as it lowered its retail comps assumptions for 2Q25, 2H25 and FY26. It now models retail comps down 23% for 2Q25 (from -16% previously), down 10% for 2H25 (from up 2% previously) and up 3% for FY26 (from up 5% previously).
The bank also said it now models an operating profit loss for FY25 of £38m, versus a previous forecast of an operating profit of £90m, reflecting a bigger loss in 1H25 and a more muted operating profit rebound in 2H25.
Stifel said that it and the market expect weak 1H25 results and a cautious 2H25 outlook.
"Investor focus should be on the new strategic vision from Burberry's new CEO, Joshua Schulman, to turn the brand's fortunes," it said.
"In July, Burberry Chairman, Gerry Murphy, said that investors should not expect a major shift in brand strategy but some rebalancing of products and price points more familiar to Burberry's traditional clientele. It looks to us that the aim is to make Burberry a more democratic luxury brand but within a genuine luxury context.
"We expect to see a heightened focus on pragmatic merchandising, with a bigger weight of classic timeless pieces in the assortment, more emphasis on its core outwear category and a reinforced offer at opening price points.
"We believe that deeper cost measures may be needed to right-size the organisation and provide funds for reinvestment to fuel top-line growth and deal with unforeseen bad stuff."
Stifel said market conditions are unforgiving for turnaround stories like Burberry lacking brand clarity and lacking "brand heat".
It also said that Burberry's market share erosion in the last decade resulted in reduced marketing firepower to compete "with deeper pockets from Continental luxury mega-brands fishing in the same pond".
Stifel said the stock offers perceived M&A optionality given its 100% free float, but it believes that potential sector consolidators like LVMH would not be interested in acquiring Burberry.
"Improving Chinese luxury demand thanks to stronger government stimulus measures or improving trends for aspirational luxury consumers would be positive for the stock," it added.
Stifel maintained its 'hold' rating on the stock.
Bellway gained as Bank of England governor Andrew Bailey told the Guardian in an interview that the central bank could become a "bit more aggressive" in cutting interest rates as long as news on inflation continued to be good.
Housebuilders were also boosted by data from Zoopla which showed that house sales rose in September at the fastest rate since the post-lockdown rebound.
A raft of stocks were lower after going ex-dividend: Bodycote, Kainos Group, Morgan Sindall Group, Murray International Trust, RIT Capital Partners, Spectris, TBC Bank Group, TP ICAP, Travis Perkins, AG Barr, Hargreaves Lansdown, Finsbury Growth & Income Trust,
FTSE 250 - Risers
Ninety One (N91) 180.90p 2.78%
Energean (ENOG) 858.00p 2.63%
Bellway (BWY) 3,138.00p 2.15%
Telecom Plus (TEP) 1,808.00p 1.92%
Dr. Martens (DOCS) 55.60p 1.83%
Drax Group (DRX) 640.50p 1.83%
Games Workshop Group (GAW) 10,690.00p 1.71%
PureTech Health (PRTC) 144.60p 1.54%
Allianz Technology Trust (ATT) 354.00p 1.43%
Trustpilot Group (TRST) 224.00p 1.36%
FTSE 250 - Fallers
Bodycote (BOY) 568.00p -4.54%
Burberry Group (BRBY) 639.00p -3.42%
Kainos Group (KNOS) 844.00p -3.10%
Spectris (SXS) 2,634.00p -3.09%
RS Group (RS1) 776.50p -2.94%
TI Fluid Systems (TIFS) 156.20p -2.74%
TP Icap Group (TCAP) 228.00p -2.56%
TBC Bank Group (TBCG) 2,505.00p -2.53%
Hargreaves Lansdown (HL.) 1,084.00p -2.52%
Bridgepoint Group (Reg S) (BPT) 328.40p -2.26%
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN