Why the China reopening is a massive boon for Burberry

Recent blowout results from rivals such as LVMH raise expectations for Burberry to do the same

Trading above the £25 level, shares in British luxury goods brand Burberry (BRBY) are testing all-time highs as Shares goes to press. But the trench coats-to-cashmere scarves seller will need to deliver an upbeat outlook statement with its full-year results on 18 May to maintain this positive share price momentum.

An extraordinary luxury boom combined with China’s economic rebound have helped rivals including LVMH (LVMH:BIT) and Hermes (RMS:EPA) to fashion forecast-beating sales. The reopening of the world’s second biggest economy should also be boosting business at FTSE 100-listed Burberry, as domestic consumption picks up in the ‘Middle Kingdom’ and Chinese travellers return to the world stage.

Results for the third quarter to December 2022 from Burberry, now refocusing on ‘Britishness’ under chief executive Jonathan Akeroyd and new designer Daniel Lee, showed comparable store sales up a meagre 1%. Yet Burberry delivered double-digit revenue growth outside of mainland China, which offset the impact of Covid-19 related disruption.

Encouragingly, Europe continued to perform well, driven by strong trading over the Christmas period, while leather goods delivered another quarter of double-digit growth globally. Reassuringly, Burberry insisted its near and medium-term targets remain unchanged ‘as we continue to target high-single digit revenue growth with operating leverage ensuring good margin progression, notwithstanding the current macro environment’. [JC]

Walmart increases automation plans to drive next leg of growth

The goal is to improve inventory accuracy whether customers shop in-store, pick-up or have goods delivered

Retail giant Walmart (WMT:NYSE) is scheduled to report first quarter earnings before the market opens on 18 May. It has delivered better than expected EPS (earnings per share) in three out of the last four quarters, beating estimates by around 12% on average according to Nasdaq.com. The analyst consensus for the upcoming quarterly results is $1.30 in EPS.

At an investor day in April where the retailer outlined plans for its growth strategy, the company said it expected to deliver first quarter sales growth of between 4.5% and 5% in constant currencies.

The company also maintained full year earnings guidance which calls for EPS of $5.90 to $6.05. Over the next four years the firm has committed to delivering 4% annual growth in sales and operating income. Achieving the target would add $130 billion of incremental sales to the roughly $600 billion sales base.

Walmart is planning a big push into automation to support the company’s rapidly growing e-commerce business. Around 55% of packages which move through its fulfilment centres are expected to move to automated facilities by 2026, saving 20% on costs, the company said.

The company anticipates increasing throughput per person resulting in higher rates of pay and less physical labour over time. [MG]

UK UPDATES OVER THE NEXT 7 DAYS

FULL-YEAR RESULTS

May 15: Westminster, Instem

May 16: DCC, Angling Direct, Likewise, Vodafone

May 17: BT, Ninety One, Experian

May 18: Investec, Burberry, National Grid, Premier Foods

HALF-YEAR RESULTS

May 15:  Centralnic, Diploma

May 16: Britvic, Marston’s, Imperial Brands, Renew Holdings

May 17: Sage Group, Auction Technology

May 18: Nexus Infrastructure

TRADING UPDATES

May 12: Beazley

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May 16: Watches of Switzerland

May 17: Bank of Georgia

May 18: Helios Towers

US UPDATES OVER THE NEXT 7 DAYS

QUARTERLY RESULTS

May 12: Olympus, Spectrum Brands

May 15: Nu Holdings, Tower, Absolute Software

May 16: Home Depot, Tencent Music Entertainment, Paladin Energy

May 17: Cisco, Target, Synopsys, Baidu, Flowers Foods, Macys, Soho House

May 18: Walmart, Alibaba, Ross Stores, Nextgen Healthcare, SilverCrest Metals

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