The ( ) share price recently hit its lowest level since 2010. Down 68% in a year, the luxury fashion giant has seen a swift implosion that has seen some investors panic. On the other hand, I know some who’ve bought the stock, with the thinking that this storm will blow over.
I don’t own any shares in the firm, but when mulling it over here are some points that I think need to be flagged up. Problems not just with demand Burberry is a global brand, with Asia being a key market. At a practical level, this means it receives money in a variety of different currencies.
It then sells these currencies and buys British pounds. This is for operating expenses here in the UK and general accounting purposes. In the July trading update, it flagged up This is because the British pound has strengthened in value recently.
According to some currency forecasters, it could continue to gain in value over the next year. This could be a real headache for Burberry going forward. So, on top of weaker demand, it could stand to suffer to the tune of tens of millions of pounds simply due to exchange rates.
Therefore, it’s key for me to remember that there are various elements that go into a business making either a profit or a loss. This then has an impact on the share price. Assessing actual value There’s a big difference between price and value.
It’s true that the stock is currently at the lowest level for well over a decade. But this doesn’t automatically mean that the company is . For e.