Chequered future

12 October 2005

With the UK luxury group s growth slowing dramatically, Angela Ahrendts will find it all the harder to live up to Rose Marie Bravo s legacy. Burberry now trades at discount of over 20% to luxury stocks. That doesn t look too steep given the huge potential overhang on the stock.

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Burberry, the luxury goods group majority owned by the UK's Gus, said revenues grew by 3% in the first half of the year on an underlying basis. Underlying sales in its wholesale business, which accounted for 54% of total revenues, fell 1%. Burberry said that in the second half of the year it expects a moderate decline in underlying wholesale revenues.

Burberry on Tuesday named Angela Ahrendts as chief executive with effect from July 1. Rose Marie Bravo, the current chief executive widely credited with Burberry's turnaround, will stay on with the company as vice chairman.

Gus is to fully demerge its 66% stake in Burberry later this year. The UK retailer will distribute the shares it holds in the luxury goods group as a dividend to its own shareholders.

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