Burberry Profits Slide, Shares Still Undervalued

Updated: We're reducing our fair value estimate for the luxury stock after disappointing results

Jelena Sokolova 16 May, 2024 | 2:28PM Alliance News
Facebook Twitter LinkedIn


Burberry shares fell after the company announced a fall in profits for the full year.

We are reducing our fair value estimate for narrow-moat Burberry to £16.80 from £21 as the company reported a decline in revenue and profits for fiscal 2023/24. For the fourth quarter, Burberry's comparable revenue was down 12%, at the low end of peers. Only Kering’s Gucci and Ferragamo brands did worse." 

Regionally, the Americas continued to be weak, down 12%; in the Europe, Middle East, and Africa region comparable sales were down 3%; and sales in the Asia-Pacific were down 17%. Mainland Chinese customer spending was down 12% globally. Adjusted operating profit was down 25% at constant exchange rates, weighed down by investments in product quality not fully offset by pricing, increased stock provisions, and general inflation. Shares remain undervalued.

Key Morningstar Metrics for Burberry Stock

• Fair Value Estimate: £16.80
• Morningstar Rating: 5 stars
• Morningstar Economic Moat Rating: Narrow
• Morningstar Uncertainty Rating: High

Burberry Share Price Reaction

Shares in Burberry (BRBY) fell on Wednesday after it reported a 40% fall in profits for the financial year to March 30 annd warned of tough trading conditions in this financial year.

Shares in the London-based luxury goods retailer lost 5% to £11.27. The FTSE 100 stock is down 54% over the past 12 months and nearly 20% in 2024 so far.



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

About Author

Jelena Sokolova  is an equity analyst for Morningstar

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures