Analysts remain divided about prospects for Burberry Group PLC (LSE:BRBY) (Burberry Group PLC (LSE:BRBY)) ahead of its first-quarter trading update on Friday.
The British fashion brand and retailer is heavily exposed to China's recent Covid-19 lockdowns and its home market in the UK, meanwhile, remains plagued by the cost-of-living crisis.
Analysts estimate that over a third of Burberry’s business is exposed to the Chinese market and foresee this as having a potential impact on the retailer’s earnings for the recent trading period.
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In relevant macro news for Burberry, China’s economic growth and retail sales figures will be published.
Gross domestic product numbers are likely to confirm that it will be extremely hard for the economy to meet Beijing’s 5.5% target for the year.
“In Q1 the economy was said to have seen an expansion of 4.8%, which comes across as extremely generous,” said market analyst Michael Hewson, noting that retail sales plunged in April and May and are likely to have remained weak in June, while industrial production has also been disappointing as various lockdowns have shut down ports as well businesses.
“One particularly significant statistic during April was that not a single car was sold in Shanghai through the entire month. Against such a backdrop it's hard to make the case for any sort of significant economic expansion during Q2 at all.”
Retail sales declined 11.1% and 6.7% in April and May but there was easing of lockdown restrictions in June.