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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

​​​Burberry slumps to four-year low after poor trading update

​​Burberry shares slumped last week after its latest trading update, and the shares have now halved since their record high last April.

Trader chart Source: Bloomberg

​​​Burberry slumps to four-year low after poor trading update

Burberry's shares have experienced a significant decline following the company's announcement that it did not witness the anticipated increase in global demand during the crucial Christmas season. The luxury brand, has been striving to reposition itself in the higher-end market as part of a turnaround plan. However, in November, the company had already cautioned about its annual profit outlook.

​During that time, Burberry had reported positive signs for its first collection under the creative direction of new designer Daniel Lee. Nevertheless, in an unexpected trading update on Friday, Burberry revealed that its retail revenue for the 13-week period ending on December 30th had dropped by 7% compared to the same period the previous year, amounting to £706 million.

​Unlike its competitors, Burberry primarily caters to a middle-income market, which makes it challenging to match the marketing expenditures of major names like LVMH. Although the stock's price-to-earnings ratio (P/E) of 10.8 and a yield of 5% may enhance its appeal, the pessimistic outlook and the substantial progress required for the turnaround program cast a shadow over Burberry's future.

​Analyst ratings for Burberry

​Refinitiv data shows a consensus analyst rating of ‘hold’ for Burberry with 1 buy, 18 hold and 3 sell – and a mean of estimates suggesting a long-term price target of 2,174.14 pence for the share, roughly 76% higher than the current price (as of 15 January 2024).

Burberry analyst Source: Refinitiv
Burberry analyst Source: Refinitiv

​Technical outlook on the Burberry share price

​Burberry’s share price has been rapidly falling from its April 2023 peak at 2,656 pence, by around 54%, with further downside looking probable.

​Burberry Weekly Candlestick Chart

Burberry weekly chart Source: TradingView
Burberry weekly chart Source: TradingView

​The Burberry share price, which is already trading at a near 12.5% year-to-date discount and is on track for its fifth consecutive week of falls, is fast approaching last week’s low at 1,162.5p. Below it beckons the share’s pandemic low at 1,017p.

​Burberry Daily Candlestick Chart

Burberry daily chart Source: TradingView
Burberry daily chart Source: TradingView

​Resistance can be seen at last week’s 1,359.5p to 1,301p price gap and along the April-to-January downtrend line at 1,405p. While it and last week’s high at 1,420p aren’t overcome, the medium-term trend will remain bearish.

​Only a currently unexpected bullish reversal and rise above 1,420p would put the March-to-July lows at 1,534.5p to 1,473.5p on the plate.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

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