Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% 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.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% 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.

Buyback could boost Burberry shares

However, the fashion retailer faces Covid headwinds in China

Burberry plans a £400 million share buyback programme for 2023. The upscale fashion retailer unveiled the scheme alongside upbeat full-year results.

Pre-tax profits rose 4% to £511 million from £490 million last year, while at constant exchange rates, revenues at the fashion retailer increased by 23% (21% reported) to a record £2.8 billion.

As a sign of confidence, Burberry restored its dividend payment to pre-Covid levels.

The shares rose 1% as the FTSE 100 was hit by a global inflation-related sell-off on Wednesday.


Burberry battles ‘near-term uncertainty’


The company said it was maintaining its earnings guidance for the full-year 2023 of “high single-digit revenue growth and meaningful margin accretion at CER [constant exchange rates] in the medium-term”. However, management said the outlook was dependent on the impact of Covid and the “rate of recovery in consumer spending in mainland China,” one of its biggest overseas markets.

Burberry is currently seeing “significant disruption” in the region due to the Covid-related lockdown, with around 40% of its store network affected. Sales in China fell 13% in the fourth-quarter. However, it expects sales to bounce back quickly once restrictions are relaxed - as has been seen following previous lockdowns.

It also said that while the economic environment meant “some near term uncertainty,” it was “actively managing the headwind from inflation.” As such, Burberry expects a currency tailwind of £159m on revenue and £92m on adjusted operating profit this year. The strong US dollar is expected to provide some resilience, however.

Strong overseas trading at the fashion brand

Trading in the US was strong, with store sales up 28% and full-price sales up 86% compared to lacklustre UK trading. Three new flagship stores were also opened in London, Paris and Shanghai, with 47 stores refurbished in its new design.

Burberry plans 65 store openings and refurbishments this year, with a £170 million to £180 million capital expenditure programme. Wholesale revenues rose 23% during the period but are expected to be flat this year.

Net debt almost doubled to £179 million from £101 million last year due to a reduction in net cash from share buybacks and an increase in leasing related liabilities on the balance sheet. Cash conversion – the ability of the company to convert profits to cash - came in at 106% for the full-year 2022 (111% in 2021).

New chief executive Jonathan Akeroyd, previously at Versace, who joined in March, promises a strategy update in November.

Luca Solca, analyst at Bernstein, told the FT that Burberry has greater exposure to the Chinese market than some of its rivals and should “therefore have more material rebound potential if the Chinese ‘zero-Covid’ policy was amended or phased out before the second half of the year”.

The shares have fallen 23% this year to 1608.5p after a decent performance over the past two years. Burberry will face currency and inflation headwinds this year, as well as the challenge of overcoming the impact to trading of continued Covid-related issues in China. However, its strength as an international brand, share buyback programme and the likely financial resilience of its customers should stand it in good stead.

Trade over 16,000 international shares from zero commission with us, the UK’s No.1 trading provider.* Learn more about trading shares with us, or open an account to get started today.
*Based on revenue excluding FX (published financial statements, June 2021).

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.

Act on share opportunities today

Go long or short on thousands of international stocks with spread bets and CFDs.

  • Get full exposure for a comparatively small deposit
  • Trade on spreads from just 0.1%
  • Get greater order book visibility with direct market access

See opportunity on a stock?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Take your position
  • See whether your hunch pays off

See opportunity on a stock?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Trade a huge range of popular stocks
  • Analyse and deal seamlessly on fast, intuitive charts
  • See and react to breaking news in-platform

See opportunity on a stock?

Don’t miss your chance. Log in to take advantage while conditions prevail.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

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

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Sunday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.


For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.