Burberry Nets a Winning Combination

Blackberry

Class players shine regardless of any surrounding generic mediocrity. Burberry is one seriously classy performer, making excellent progress via a strategy that places its brand prominently in front of high net worth potential customers.

Burberry has been concentrating on opening stores in airports, with 6 openings reported in the interim results to 30 September 2014. Focus has also been directed towards flagship locations such as Los Angeles, Tokyo and Shanghai. It comes as no surprise that Tokyo and Shanghai are 2 of the regions’ largest markets.

Burberry has a clear mission to drive brand momentum and is using a re-launch of its well-known heritage clothing and apparel range to good effect. Bringing in Romeo Beckham as part of this branding push is working remarkably well with 6.6 million views of Burberry’s promotional on-line video since being launched on 03 November.

Interestingly, the choreographers managed to include a snapshot of Romeo’s own heritage - his father’s impressive right foot. The vision etched on Romeo’s face as his right foot sweeps through the snow clearly shows that he may well be wishing to emulate David’s footballing feats at some stage. Nice inclusion!

Burberry announced some impressive growth, profit and dividend figures recently as part of its interim results to 30 September 2014. Revenue was up 14% to £1.1B, profits rose 6% to £152M and the interim dividend was raised 10% to 9.7p per share.

November has technically been an excellent time to buy Burberry shares over the last few years, especially when catching the intra-day nadir for that particular November. Gains within the 4 month period December to March have yielded on average 28% since 2009 (assuming perfect timing trough to peak within that period). 2008 saw exceptional gains if held to May – but those times were extraordinary to say the least and required a leap of faith to get involved.

Burberry shares have been trading in a narrow range of £14.00 to £16.00 since July 2013, which is also the upper end of a longer, larger trading range of £10.00 to £16.00 dating back to October 2010.

Technically, the longer a restricted trading range is in place, a significant breakout of that range can lead to a larger move away from the range in the direction of the original breakout. So, if Burberry shares can repeat historical moves from this November lows (currently £14.75 set on 04 November) then a breakout to the upside will be in place.

Watch for a break below £14.00 though, as an equally quick move down could result.

It seems that Burberry is ripening for a fruitful investment experience!

Date Company Status Mid Price Target 1 Target 2 Target 3 Target 4
15/11/2014 Burberry Initial write up £15.58 £16.35 £17.91 £18.92 £20.60

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