- Takeover tilt by Italian rival expected
- Burberry results due 14 November
- Analysts expect lurch into loss
Firmly out of fashion with investors this year amid a slowdown in luxury goods demand, shares in Burberry (BRBY) rallied 2% to 822p on 11 November as excitement surrounding a bid from Italian outerwear rival Moncler (MONC:BIT) continued to build.
According to correspondence viewed by The Mail on Sunday, staff at one of the British luxury goods leader’s flagship London stores have already been told about the takeover by padded jackets purveyor Moncler, but they have been instructed to remain tight-lipped ‘until an official statement has come out’.
Should it come to pass, a merger between Burberry and Moncler would create a formidable outdoor specialist giant better-equipped to compete in the global luxury market.
BURBERRY ON THE BRINK?
A source told The Mail that trench coats-to-cashmere scarves seller, famed for its iconic Equestrian Knight Device and the Burberry Check, has paused discussions with business affiliates who sell its merchandise until more details of the Moncler bid have been confirmed.
Founded in 1952, Moncler is now famous for its padded jackets, which are popular with skiers and mountaineers, but the company also owns Stone Island.
In September, luxury goods leviathan LVMH (MC:EPA) snapped up a 10% stake in Moncler’s owner Double R, stoking speculation that the Bernard Arnault-controlled conglomerate is behind the bid for embattled Burberry, whose string of profit warnings resulted in ejection from the FTSE 100 in September, leaving it vulnerable to a takeover.
The recovery in the Chinese market which Burberry was counting on has failed to materialise, while the company’s attempt to raise margins by hiking prices has done more damage than good.
Burberry has said nothing since the latest in a string of profit warnings in July, which prompted the firm to cease dividend payments and announce the immediate departure of chief executive Jonathan Akeroyd.
RED INK EXPECTED
New head Joshua Schulman has the job of cleaning up the mess after his stints at Coach, Jimmy Choo and Michael Kors, and at least he has low expectations on his side as he looks to revitalise the value of Burberry’s heritage check design.
All eyes will be on the change in comparable retail sales when Burberry reports first-half results on 14 November. Momentum deteriorated throughout last year and got worse in the first quarter of the year to March 2025, notably in Asia, thanks to China and Hong Kong, but also America.
An expected first-half plunge in sales is expected to drag Burberry into the red, with analysts looking for an adjusted operating loss of £45 million compared to last year’s interim profit of £223 million.
