Belfast Telegraph

Shares on rise for Burberry amid talk of an investor

By Holly Williams

Luxury fashion label Burberry saw shares surge higher amid speculation that a mystery investor could be planning a hostile takeover attempt.

The trenchcoat maker saw its stock leap as much as 6% higher on London's FTSE 100 Index after a Financial Times report last night revealed Burberry had sought advice on defence tactics after an investor built up a near 5% stake.

It is understood that Burberry asked HSBC to reveal the name of its client who bought the shares, but was unsuccessful.

Burberry is said to have called on experts at financial advisory firm Robey Warshaw, as well as its corporate broker Morgan Stanley, for guidance.

It is thought rivals such as luxury goods group LVMH or private equity firms may be behind the stake-buying move.

But there are also reportedly concerns that it could be an activist investor looking for a shake-up at Burberry.

Burberry has become vulnerable to takeover interest having seen its stock plunge by nearly a quarter over the past year on slumping demand from Chinese shoppers.

The group, which makes around a third of its sales from the Asia Pacific region and has a significant presence in China, has been hit hard in particular by falling spend by Chinese shoppers in Hong Kong - traditionally a prime shopping destination for Chinese consumers.

A pull-back in luxury spending by Chinese and Middle Eastern tourists has also affected its UK business.

Under-pressure chief executive Christopher Bailey, who is also the firm's creative director, recently announced proposals to save £20m and also unveiled plans that would see Burberry's fashion shows reduced by half and allow customers to buy designs immediately.

The innovative change means customers will not have the usual six-month wait for catwalk designs to hit the shelves of stores.

Belfast Telegraph