The Share Centre still optimistic despite poor outlook from Burberry

14th Oct 2014 12:40

The Share Centre has maintained its positive stance on Burberry despite the luxury fashion group's gloomy outlook which sunk its share price on Tuesday.The company's first-half update was more or less in line with expectations with underlying revenues rising 14% to £1.1bn.However, the company warned that the "external environment is becoming more difficult" and that this would offset the reduced adverse impact of foreign exchange movements over the full year."There are certainly challenges for the sector in the short-term, with fears that the Ebola crisis may impact tourism, and therefore sales of luxury goods. Equally, signs of weakness in the European economy may continue to impact performance," said Helal Miah, investment research analyst at The Share Centre."Nevertheless, we believe there are solid grounds for optimism," he said.Miah said that the "sheer scale" of the middle class in the Far East should underpin demand for luxury companies, while exports should be boosted by a recovery in global economic growth and a weaker pound.He said: "We continue to recommend Burberry as a 'buy' as the company continues its growth strategy with 20 mainline stores opening during the year and the closure of less profitable outlets. These changes are expected to contribute in the mid-single digits to the group sales and the company is well positioned to benefit from the holiday season."The stock was down 4.2% at 1,417p by 12:36.