Broker snap: Strong execution continues at Burberry, says Nomura

17th Apr 2013 09:36

Nomura has kept its 'neutral' rating and 1,350p target price for luxury brand Burberry but has said that its valuation is 'becoming attractive' after a decent fourth quarter.Second-half trading was better than estimates, Nomura said, with Retail revenue growth at constant currency up 14% in the fourth quarter, ahead of 6.0% growth in the third quarter.However, forward guidance was lower than expected with Wholesale sales expected to fall 10% in the first half alone. Meanwhile, the firm said that after two years of above-average space growth, net new openings in Retail are planned to contribute low to mid single-digit percentage growth throughout the year.Nomura said: "This drives more reliance on comparable stores (our estimate +5.0%) to deliver underlying Retail/Wholesale margin expansion of 28 basis points, deriving a new full-year profit before tax estimate of £454m." The previous forecast was £461m.Nevertheless, the broker remained upbeat: "With organic sales better than peers in Q4, particularly in Retail, we believe Burberry continues to execute well, driving improved conversion, further elevating the brand and improving average unit retail selling price. "While FY14 is more reliant on comparable stores, our confidence in the group's ability to deliver has increased."Shares were up 2.84% at 1,302p by 10:27 on Wednesday.BC