UK/FRANCE/ITALY: LUXURY FASHION LABEL BURBERRY MAKES ITS DEBUT ON THE LONDON STOCK MARKET
- Title: UK/FRANCE/ITALY: LUXURY FASHION LABEL BURBERRY MAKES ITS DEBUT ON THE LONDON STOCK MARKET
- Date: 12th July 2002
- Summary: (U5) PARIS, FRANCE (RECENT) (REUTERS) VARIOUS OF MODELS ON CATWALK
- Reuters ID: LVA5OPUMPMFZ3G7YS8J8DLF6UPQW
- Location: LONDON, ENGLAND, UNITED KINGDOM / PARIS, FRANCE / ROME, ITALY
- Country: Italy United Kingdom France
- Duration: 00:00:31
- Topics: Business,Entertainment,Economy
- Story Text: The luxury fashion label Burberry has made its debut on the London stock market but got off to a wobbly start.
Burberry's owner, retail giant GUS decided to brave the volatile stock market conditions and float a 22.5 percent slice of the raincoat maker on Friday (July 12). But the stock dipped below the 230 pence offer price despite being priced at the bottom end of its expected range.
With the share offering 2 and a half times oversubscribed - GUS executives and their bankers decided to go ahead with the Burberry float amid slumping stock markets. Despite some strong profits figures in its most recent report - David Buik at Cantor Index thinks Burberry is still being punished for investors lack of confidence in the earnings outlook for just about any company.
"I think the major crisis problem we have at the moment is earnings. There's a lot of talk about corporate integrity and governance and fraud and everything else. But at the end of the day it's earnings and P/E ratios and whether there's a general feeling that Burberry cannot sustain the level of earnings that they've suggested remains to be seen on the base of one plaid pattern." he said.
The star designers have been out in force in Paris this week - showing off their autumn-winter collections and hoping to whip up new interest among buyers rattled by the September 11th downturn. To illustrate, one of Burberry's closest rivals Gucci recently reported a 42 percent drop in net income for its first quarter and it's been a similar story at LVMH and Bulgari. But Hilary Cook at Barclays Private Clients says while spending on big ticket items may be tailing-off in markets like the UK and the US - there are still growth opportunities elsewhere
"The Bank of England wants some more pressure on consumer spending it is simply too strong particularly on housing. But overseas there's real scope for growth in Europe, where consumer spending has not been too strong and economic growth is just starting to pick up," she said.
Cook believes the strategy of luxury goods makers diversifying across a range of products and creating global brands should help them pick up business in a range of different markets.
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