Burberry faces a potential takeover threat, city analysts have cautioned, following a 20% decline in the luxury fashion retailer’s share price since the beginning of the year.
A profit warning from fellow luxury rival Kering, which owns Gucci, triggered the British brand’s shares to slump on Wednesday (24 April). The 2.5% drop means Burberry is now worth £4bn.
Abrdn investment manager Sasha Kachanova told The Telegraph: “Burberry remains a potential takeover target, particularly at its current valuation.”
“As the sole British brand of scale operating independently – a rarity in the luxury industry – it boasts a rich heritage and the opportunity to enhance its iconic product lines and accessories.”
Abrdn is one of Burberry’s top twenty shareholders, although the newspaper reports that Kachanova doesn’t hold the stock directly.
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A Bloomberg survey conducted last year among 17 City M&A desks, fund managers, and analysts identified Burberry as one of the leading companies speculated to be potential takeover targets, alongside Hugo Boss and Swiss luxury group Richemont.
Burberry has been one of the worst performers on the FTSE 100 so far in 2024 as demand for luxury goods wanes, particularly in China.
In January the fashion brand lowered is profit guidance for the year after sales dropped 7% over the golden quarter.
CEO Jonathan Akeroyd said: “We are continuing to deliver the transition to our new modern British luxury creative expression for Burberry which started appearing in our stores in early autumn.
“We are still in the early stages of executing on this, which has become more challenging against the backdrop of slowing luxury demand.”
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