Burberry advance checked by struggles at French rival LVMH

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Just when the stock market turnaround was starting to take shape for Burberry, its French luxury rival LVMH scuppered the revival.

The owner of Louis Vuitton handbags and TAG Heuer watches reported first-quarter organic sales up 3% — below analyst expectations, with growth in fashion and leather goods grinding to a halt over the past three months.

Credit Suisse warned that LVMH’s troubles spelt bad news for “soft luxury players” and said it was cautious on Burberry ahead of Thursday’s second-half trading update.

Burberry shed 36p, or 2.8%, to 1261p, having put on 9% so far this year. The shares were among the FTSE 100’s worst performers last year as China’s slowing growth sent shockwaves through the global economy, filtering through to luxury players, which rely heavily on demand from Asian tourists.

Burberry was among the losers and even though mining stocks made a good fist of it, the FTSE 100 slipped 19.97 points to 6180.15.

Calls from Morgan Stanley to buy shares in Diageo went unnoticed in the City as the Johnnie Walker-to-Smirnoff maker’s shares saw 11.84p poured away to 1885.66p. The broker said its “turnaround starts now” as it expects a strong second-half performance and tipped the group for a share buyback next year.

The City is expecting big things on Thursday from JD Sports, 3p better off at 1146p, which is due to release its annual results.

Broker Panmure Gordon upgraded its forecasts and expects it to beat City hopes for the sixth time in a year. The group will quickly overtake Sports Direct (up 3p at 386p) as the country’s biggest sporting goods retailer by market value if Panmure’s new 1325p price target is anything to go by.

Elsewhere in retail, sofa seller ScS was sitting pretty after an impressive first-half performance which helped its stock to improve 9.04p to 202.79p.

The London-listed Iraqi oil firms welcomed payments from the cash-strapped Kurdistan government for oil exports. Tony Hayward’s Genel was up 2.31p to 94.31p and former AIM darling Gulf Keystone gained 0.55p to 6.65p.

Finally, Falkland Island Holdings fell 21.05p, or 10%, to 184.95p after it alerted investors that weaker profits from its UK-based art-handling business, Momart, would cause annual profits to come in between 10% and 15% lower than last year at £3 million. 

The firm is shifting focus away from the Falklands because of the oil-price slump.

Source Article from http://www.standard.co.uk/business/burberry-advance-checked-by-struggles-at-french-rival-lvmh-a3223761.html

April 13, 2016 |
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