Morningstar

Burberry: Sales Helped by Chinese Buying at Home and Abroad As U.S. Demand Weakens

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Securities In This Article
Burberry Group PLC
(BRBY)

We are maintaining our fair value estimate of GBX 2,090 for narrow-moat Burberry BRBY as the company reported solid first-quarter revenue on a rather easy comparison base. First-quarter comparable sales were up 18% (1% in the first half of fiscal 2022/23), driven by the Asia-Pacific region and notably China, where the comparison base against last year is easy (first-quarter fiscal 2022/23 sales in mainland China were down 35% due to lockdowns and were up 46% in the reported quarter). South Pacific sales were up 39%, while sales in Japan were up 44%, helped by the return of traveling Chinese consumers. Overall, Chinese buying globally was up by midteens versus 2 years ago (a better comparison due to COVID-19-related lockdowns in the prior year). Sales in Europe, Middle East, and Africa were also solid, up 17%, thanks to tourism. The Americas was weak, supporting our view of deceleration in this market after 2 years of unusually strong growth, helped by a number of nonrecurring tailwinds. Sales in the Americas were down 8% and sales to U.S. consumers globally were down by a mid-single-digit percentage.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Jelena Sokolova, CFA

Senior Equity Analyst
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Jelena Sokolova, CFA, is a senior equity analyst, Europe, for Morningstar*. She covers the consumer discretionary/luxury goods sector. She is a lead analyst for the sector, performing in-depth fundamental analysis and DCF modeling resulting in investment ideas tailored to long-term investors and analyzing the durability of company competitive advantages based on Morningstar proprietary “moat” methodology. Since 2023 she is a member of the Moat Committee, assessing competitive strengths across sectors.

Before joining Morningstar in 2016, Sokolova worked as a senior equity analyst at CE Asset Management in Zurich covering European large caps. Having started as an analyst for CE Asset Management office in Riga in 2010, Sokolova got promoted to a Senior Analyst position in 2013 covering European Large cap stocks with a generalist focus, reporting to CE Asset Management Investment Committee.

Sokolova holds a bachelor’s degree in Business Administration from the Banking Institution of Higher Education, Riga. She also holds a a master's degree in international business from Riga International School of Economics and Business Administration. She also holds the Chartered Financial Analyst® designation.

* Morningstar UK Ltd (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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