Burberry shares drop as Goldman highlights subdued outlook
Luxury retailer Burberry was under pressure on Friday after Goldman Sachs removed the stock from its Sustain Focus List, highlighting the company’s subdued outlook.
Burberry Group
1,122.00p
16:40 18/04/24
FTSE 100
7,877.05
17:14 18/04/24
FTSE 350
4,334.00
17:14 18/04/24
FTSE All-Share
4,290.02
16:54 18/04/24
Personal Goods
15,614.86
17:14 18/04/24
It pointed out that over the last two years, Burberry has seen a weaker-than-expected financial performance, with earnings per share down 2% and group cash return on capital invested (CROCI) down 407 basis points to 17.7%.
“The key drivers of this deterioration have been subdued sales growth and increasing costs associated with the company’s strategic investments, including omni-channel,” the bank said.
“We are concerned that these headwinds continue, and note that our analyst now expects EPS compound annual growth rate of 6% over FY16-21E with CROCI falling 206 basis points over this period.”
Goldman Sachs said the more subdued outlook and concerns about Burberry’s ability to regain prior levels of profitability have led it to remove the company from the GS Sustain Focus List.
The Sustain list is a global investment strategy aimed at long-term, long-only performance with a low turnover of ideas. The list includes leaders its analysis shows to be well positioned to deliver long term outperformance through sustained competitive advantage and superior returns on capital relative to their global industry peers.
At 0955 BST, Burberry shares were down 2% to 1,259p.
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