Equities Update: TUI, Burberry…

TUI thaws winter freeze to beat forecasts

 
Adam Vettese, analyst at investment platform eToro, says: “Winter is certainly never the highlight of the year for holiday operators like TUI, but some milder than usual weather as well as the Easter break coming earlier meant more people treated themselves to a last-minute getaway in the first quarter of the year. The expected loss was 17% lower than consensus.

“This is an encouraging sign going into the peak summer season where TUI tends to do most of its business as the current climate does not come without its challenges in terms of manufacturer deliveries and costs, particularly fuel prices. Despite some lingering economic uncertainty, it does not seem demand will be lacking, inflation pressures have begun to ease as consumers have more disposable income for travel. TUI is relying on this to be true if it intends to meet its forecast of hiking up profits 25%. Investors will also be hoping that this can kickstart some movement in the price with shares basically flat for the year so far.”
 

Burberry falls out of fashion as sales slump

Mark Crouch, analyst at investment platform eToro, says: “The last twelve months have been particularly tough on Burberry. With inflationary pressures weighing heavily on consumer spending, the luxury goods market has inevitably taken a hit, and with-it Burberry seems to have fallen out of fashion.

“As consumers’ appetite for luxury goods has dried up, the knock-on effect for Burberry has been severe, issuing two profit warnings in six months sending the share price tumbling.

“Burberry’s full year earnings are, at best, disappointing. Operating profits fell by 34% and like-for-like sales fell 12% in the final quarter wiping out gains made earlier in the year.

“The luxury fashion house has pledged to refocus their brand image, improve product range and tighten up its distribution network, while adapting to the harsh economic conditions they currently face. With 50% of stores now new or refurbished, investments are already being made to this effect.

“Burberry shares have traded at these levels only a handful of times over the past decade, and in every case have gone on to recover making new all-time highs. This may present an opportunity to would-be investors as a risk worth taking. However, with conditions set to remain challenging in 2024, Burberry are not out of the woods yet.”