Burberry Group PLC (LSE:BRBY)’s Friday, 14 July first quarter update will likely delve into how the luxury brand is coping with a slower-than-expected Chinese economic recovery.
Given the reliance on Chinese markets by luxury brands, the increasingly evident sluggishness of the world’s second-largest economy to recover post-covid could spell bad news.
AJ Bell analyst Russ Mould explained that recent falls in Burberry’s share price could well be as a result of China’s slow bounce back, with the stock falling 9% over the past month.
Burberry had reported higher profits thanks to strengthening demand from Chinese consumers in the year to March, so whether this continues to grow will be key.
Pointing to Burberry’s upcoming results, Mould continued: “All attention will focus on the headline retail sales number, plus the like-for-like comparables.”
Though Burberry’s quarterlies traditionally focus on headline sales, Mould added, “more colour” is often provided on trading, with Chinese business indeed likely to be key.
“Analysts and investors will also look to weigh how these figures stack up relative to the near [and] medium-term guidance,” Mould said.
Burberry had guided towards high single-digit percentage revenue growth and an adjusted operating margin of around 20% in last year’s results, marking a fall from 20.5%.
“Remember that Burberry is currently running a £400 million share buyback programme,” Mould closed, “any updates on that and capital allocation policies may be of interest”.