There are opportunities for Burberry PLC (LON:BRBY) in China under its new leadership.
So says the German bank Berenberg following the return of a delegation of analysts from the People’s Republic.
It concedes Burberry is behind some of its rivals in China, most notably Gucci (which it says has “stellar momentum”).
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However, there is an opportunity in this still-developing but huge market for luxury goods - particularly among millennials.
The uber popular DK88 leather handbag is proving a runaway success with China’s young affluent, Berenberg said in a note to clients.
“Our recent visit to China has confirmed that while Burberry is benefiting from the recovery in the local market, it seems to be currently lagging its peers,” the bank said.
“However, the brand’s strong positioning and the initial success of its DK88 bag as well as other product initiatives such as ‘See now, buy now’ or one label strategy, which have been attracting an increasing number of the millennial consumers, point to multiple opportunities that could open up for Burberry under the new leadership of Marco Gobbetti.”
Berenberg “encouraged” by another senior appointment
He takes charge next month. And while it is too early to second-guess Gobbetti’s strategy, Berenberg is “encouraged” by another senior appointment - chief financial officer, Julie Brown.
It is hoped she will accelerate Burberry’s returns to shareholders, which currently stand at a not-significant £350mln.
Berenberg continues to rates the stock ‘buy’ and bumped its price target up to 1,900p a share from 1,840p.
In early morning trading, Burberry shares on the FTSE 100 index were around 1%, or 17p at 1,759p.