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Fashion to the forefront on Wednesday as ASOS and Burberry report; UK inflation data eyed

The clothing firms find themselves potentially facing a spending squeeze as consumers prioritise essential goods amid an economic downturn

Burberry Group PLC - Fashion to the forefront on Wednesday as ASOS and Burberry report, UK inflation data eyed

The mid-point of the week will see fresh news from the fashion sector with trading updates expected from both Burberry and ASOS.

There will also be something to keep macro analysts occupied as the latest set of UK inflation data is released.

Burberry may keep slipping on the catwalk

Burberry Group PLC (LON:BRBY) is releasing a trading announcement on Wednesday to shed some light on trading in the first quarter of its financial year.

As per the last update in May, half of its stores were still closed but that may have changed as lockdown restrictions have been gradually lifted around the world.

The raincoat designer said online sales picked up strongly with a strong response to its most recent collections, while cumulative sales in mainland China and Korea were ahead of the prior year.

However, profits for the year to March 28 tumbled due to a £245mln stock and stores writedown amid disruption in key Asian markets, pushing profits down 62%.

The luxury group has also been suffering tensions in Hong Kong which are far from being resolved.

“At times of economic strife, luxury spending by the mass affluent is likely to be something to be given up and the unrest in Hong Kong flaring up again, these factors lead to us be on the whole fairly cautious about investing in Burberry,” Helal Miah, analyst at The Share Centre, commented on the preliminary results.

ASOS back on the shelves

In a day of fashion news, ASOS PLC (LON:ASC) is updating the market with trading figures for the four months to June 30.

The retailer saw sales tanking at the start of lockdowns as customers prioritised spending elsewhere, but noted a slow pickup in demand thanks to promotional activity.

Several City analysts see the upside in the online-only model, although the economic crisis may dampen growth.

Inflation insight

Ahead of the unemployment data on Thursday, the UK’s inflation figures for June will provide further insight into how the lockdown has affected the British economy.

Meanwhile, inflation remains very low at 0.5% in May, and while wage rises are staying ahead of this there are concerns that rising oil prices could increase costs at the pumps and squeeze consumers that are already struggling, potentially causing knock-on effects for retailers and leisure firms as they attempt to recover from the effects of lockdown.

Significant announcements expected on Wednesday July 15:

Trading announcements: ASOS PLC (LON:ASC), Burberry Group PLC (LON:BRBY), Dunelm Group plc (LON:DNLM), Hochschild Mining Plc (LON:HOC)

Finals: Dixons Carphone PLC (LON:DC.)

Interims: McCarthy & Stone PLC (LON:MCS)

Economic data: UK inflation, US production

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