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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 shares down 6% on China woes

Lockdowns in China have had a marked effect on Burberry’s bottom line.

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Showing just how much business Burberry has in China, the luxury goods chain has seen its shares drop after the company said that the lockdowns in China have had a detrimental effect.

(Video Transcript)

Dependence on China

The London-listed luxury goods group, Burberry Group PLC has come out with a trading statement this morning, and it highlights the dependency the company seems to be having around China.

Now, in terms of the figures out this morning, retail comparative sales were up 1%. The market had been expecting a drop of 3.4%, but the company says that these figures have been adversely affected by the lockdowns in mainland China. Excluding mainland China, the comparable store sales grew something like around about 16% so far as other areas of the world are concerned, like EMEIA, this is emerging markets and so forth, comparable store sales are growing 47%.

Burberry chart

The other thing that the share price, I think, took into context with this one, if we look at this, you can see the big drop that we've seen at the moment - down almost 7% - as we are speaking. After about an hour and 20 minutes worth of trading today, it's commenced the share buyback program, a full £400 million expected to be completed by the financial year. We knew this was coming, it was just a question of when. It's been confirmed this morning that it has got that now underway.

So, shares down at 1541 and we got support at 1474. But that coincides that low we had there back in January 2021. These are the Covid lows all the way down here at £10.20. So, we remain well above that level and I think it would be interesting to see whether or not this area of 1474 holds in the longer term. So that's something else to watch out for so far as Burberry is concerned.

Outside headwinds include this line up here, which of the highs we had back on the 7th of June, which includes the 200-day moving average at around about the £17.50 level.

We're waiting for China to come back online and these lockdowns to end to start to see that some sort of demand will be revived for Burberry, which as I said at the top, is pretty much dependent on China for boosting sales.

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