Ahrendts departure overshadows Burberry figures

An impressive first-half revenue growth of £1.03 billion and a 14% year-on-year increase would under normal circumstances ensure a solid start to the trading day.

However news that Burberry's long-standing chief executive Angela Ahrendts is moving on has shaken investors, and in the first ten minutes of trading the shares have dropped by almost 5.5%. Ms Ahrendts will be replaced by chief creative officer Christopher Bailey. As Ms Ahrendts is moving on to a new role at Apple, it is hard for the City not to assess this as a move up for her and a loss for Burberry.

When higher-management are replaced from within it does help to ensure continuity in the company’s strategy and planning. The management switch will not take place until well into next year, and with such a long transfer period any hiccups should be avoided.

In comparison to many FTSE stocks, Burberry’s dividend yield of 1.83% is a little on the low side when you consider the average for the FTSE is 3.8%. But even with this morning’s drop in the share price, the company is still a healthy 22% higher this year.

Burberry Group plc (DFB) chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.