Stock in Focus: Burberry

Being the largest publicly traded British luxury fashion house sets the company apart internationally where the company garners more attention than smaller British brands

Paul Swinand 17 July, 2014 | 11:18AM
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Possessing a brand with recognizable fashion elements such as its iconic plaids and a history of innovations, including patenting the trench coat and creating the fabric gabardine, the Burberry (BRBY) brand is a source of economic returns, in our view, that is hard for competitors to encroach on.

The company exhibits high gross margins (around 70%) and operating margins in the high-teen to low-20% range, and we believe Burberry is again on the forefront of innovation. The company is smaller than many of its global peers, but has been doing unique marketing and developing differentiated customer experiences as it grows, and will continue to take control of international distribution and as well as expand its product lines.

Being the largest publicly traded British luxury fashion house also sets the company apart, in our view, especially internationally, where the company garners more attention than smaller British brands. We believe its brand, designs, and recognisable fashion elements occupy a unique space in customers' minds, giving it a defensible niche in luxury and earning it a wide economic moat.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Burberry Group PLC1,896.00 GBX1.17Rating

About Author

Paul Swinand  is an equity analyst at Morningstar covering department stores, luxury goods, sporting goods, apparel and footwear.