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
Facebook Twitter LinkedIn

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.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
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.