Burberry gains Liberum Capital confidenceWednesday, 07 December 2011
The FashionUNited Top 100 closed down Wednesday, reaching
the 1,303.99 after losing 5.19 points. Markets are stressing under the concerns geared from the Eurozone, where the new treatment is arising concerns from all around the globe.
London's blue chip index was up 60.44 points in earñy morning trading, having closed 0.76 of a point higher in the previous session. Among the top gainers in the FTSE 100 were insurance buyout vehicle Resolution and luxury goods firm Burberry each benefiting from bullish broker comment. Burberry, up 12.7 percent in 2011 compared to a 5.6 percent fall on the FTSE 100, gained 2.5 percent as Liberum Capital starts coverage of the luxury goods firm with a "buy" rating and 1,535 pence 12 month price target.
"Burberry has reached an inflexion point. After more than a decade of restructuring, the cost of sorting out legacy issues and investment in a growth platform, is set to fade as both sales and margins accelerate," Liberum said.
Other retailers have not performed so well given disappointing UK data. In a cautious outlook on European retail, JP Morgan said: "With three weeks still remaining to Christmas, the outlook is worsening daily both in the UK and Europe and we still perceive considerable risk to estimates across the board." "This is not yet reflected in share prices, despite the apparent inexpensive sector rating, recent share price reactions show us that disappointments are far from priced in."
Finally, Aeropostale posted its quarterly figures, with net sales for the third quarter of 2011 decreased by $6.2 million, or by 1%, compared to the same period last year. The decrease in net sales was driven by a decrease of 9% in comparable store sales partially offset by increased sales from new and non-comparable store and e-commerce sales.
“The third quarter of 2011 continued to be challenging. We are still in the midst of a transition period with our merchandise, refining our assortment to resonate more with our customer. At the same time, the retail environment remains very promotional, with many teen retailers increasing both the depth and breadth of their promotions. Additionally, during the quarter, we continued to experience higher product costs compared to the same period in 2010. These factors reduced our overall profitability for the quarter, and we expect that these trends will continue through the balance of 2011.Our primary focus is to regain balance in our merchandise assortments and broaden our offering to meet the fashion needs of our core customer. Additionally, we continue to execute our other key strategic initiatives, including enhancing processes and technology, and developing our long-term growth drivers such as expanding our P.S. from Aéropostale business and pursuing additional international opportunities,” the company said in an statement.