With the showing strong performance year-to-date, it’s looking harder to sniff out undervalued shares than it might have been a year ago. The index is up 8%, as I write, ahead 12% from a low in January, and the majority of its constituent companies might spend December clinking glasses in boardrooms to toast what might go down as the best year since 2009. ( ), on the other hand, won’t be joining in any celebrations.
The luxury fashion goods retailer has suffered a miserable year as its shares have halved in value and are down 73% from the year before. They now lie at their cheapest price for 14 years. The obvious question is, is this a tantalising ‘ ‘ moment? Or has the brand simply fallen out of fashion? Catch-up Burberry’s decline can be put down to, in part at least, a game of catch-up it played with luxury groups like (Louis Vuitton Moët Hennessy).
LVMH’s success selling expensive clothes and expensive wine hoisted it to become Europe’s number one company by market-cap and briefly made owner Bernard Arnault the richest man in the world. It can hardly be argued that those weren’t bad footsteps to follow. The issue was that LVMH’s luxury prices were a tier or two above, and Burberry’s subsequent price hikes to bring it in line with the French competitor and other ultra-luxury labels weren’t taken too well in the middle of a wider luxury slowdown.
The 29 June update revealed global sales fell 21% and sparked a switch of CEO only two weeks later. Custo.