FTSE 100 fallers: why Burberry and WPP share prices slid this week?
Burberry’s share price was hit as it braced for a £100 million sales slump due to protests in Hong Kong, while WPP saw its stock slide after rival Publicis’ Q3 revenues come in below expectations.
Global stocks rallied this week, but the FTSE 100 struggled to make significant gains due to a stronger pound stoked by renewed hopes of a Brexit deal following meetings between UK Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar.
The FTSE 100 has broken through the 7200 level several times this week, only to run out of steam.
‘Dips towards 7100 have been buying opportunities, or at least have found support,’ Senior IG analyst Chris Beauchamp said. ‘But a firmly bullish view requires a move through 7230 to suggest that the range-bound period is over.’
Burberry stock slides as Hong Kong protests hit sales
British fashion retailer, Burberry, saw its share price fall this week after analysts announced the company is likely to suffer a £100 million sales hit as a result of ongoing protests in Hong Kong.
The luxury brand has 10 stores in Hong Kong, with the city responsible for generating around 8% of the company’s total sales. However, analysts at Jefferies said that the company could recoup half of its lost sales from other geographies.
‘The simple solution is don’t deliver stuff to Hong Kong anymore, there’s no point,’ Jefferies analyst Flavio Cereda told The Telegraph.
‘Or if you’re going to deliver 500 jackets, then deliver 50 instead and ship the rest of them off to mainland China.’
Burberry’s share price has fallen more than 3% since Jefferies comments, with the stock closing at £19.97 on Friday, down from £20.32 a share at the start of the week.
Overall, the stock has performed well this year, with it up more than 18% since the beginning of January and investors remain optimistic about its earnings growth with the company’s price-to-earnings ratio sitting at 24.76x
In its Q1 results, the luxury fashion brand’s CEO Marco Gobbetti said he was pleased with its performance considering the business is in the middle of a multi-year transition, with sales figures reflecting an encouraging reaction to its latest collections from new creative director Riccardo Tisci.
Burberry is set to release its half-year results on November 14.
WPP shares slump after Publicis sees revenues miss expectations
WPP shares fell more than 4% on Friday, driven by its French rival Publicis publishing weaker-than-expected Q3 revenues.
Earlier this week, WPP said that ‘there has been no significant change' to trading since its update in August.
WPP’s underlying net revenues in its first six months came in lower than that of last year, though the pace of the decline in North America – its most important market – slowed in Q2.
The company’s full-year guidance remains unchanged and the business maintained its half-year dividend at 22.7p a share.
WPP will unveil its Q3 results on October 25.
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