Wednesday preview: Burberry to address China crisis

11th Oct 2011 16:38

Fashion chain Burberry lost its "stock market darling" tag in the back end of September as fears grew that growth in China, one of Burberry's major markets, could be on the wane. Wednesday's second quarter (Q2) trading statement from what is one of Britain's flagships in the fashion world may address those concerns, but Seymour Pierce, for one, thinks there is little to worry about."Despite the recent sell off in Burberry shares and the sector generally driven by macro concerns over a potential global slowdown and a hard China landing, we expect Burberry to report strong Q2 trading after a faultless Q1 performance," the broker said. "Focus will be on China's performance and for any evidence that US department stores will cut back wholesale orders for spring/summer 2012," it added. The broker is forecasting half-year sales will be up 29% on last year to £828m, which is above the market consensus of £816m. "H1 [first half] retail sales are expected to be up 44% to £527m (consensus £515m), helped by the first time consolidation of China (acquired 1st September 2010) with comparable sales ahead 13% (consensus 13%). China should add an additional 11% more space in H1. We are forecasting H1 wholesale sales up 9% to £246m (consensus £246m) with underlying growth of 19% compared to H1 wholesale guidance of high teens growth and licensing revenues up 11% to £54m (consensus £53m)," Seymour Pierce said.The market will look for management to confirm full year retail average selling space, excluding China, is set to rise by around 15% and for full year licensing income to be up 10%, according to Seymour Pierce. "Management is also expected to reiterate its previous guidance that H1 retail/wholesale margins will be down on last year due to higher opex [operating expense] cost weighting from its investment in refurbs [refurbishments], new space, Japan non-apparel JV [joint venture] and LATAM [Latin American] start up plus digital," the broker added.INTERIMSDatatec Ltd. (DI), Evraz Group SA GDR (Reg S)INTERIM DIVIDEND PAYMENT DATECapita Group, CPP Group, Dairy Farm International Holdings Ltd. (Singapore), Hongkong Land Holding Ltd. (Singapore), Jardine Matheson Holdings Ltd (Singapore), Jardine Strategic Holdings Ltd. (Singapore), KBC Advanced Technologies, Restaurant Group, Shore Capital Group Ltd.INTERIM EX-DIVIDEND DATEAll Leisure Group, Ashley (Laura) Holding, Balfour Beatty, British American Inv Trust, Capital Shopping Centres Group, Cenkos Securities, Cobham, CQS Rig Finance Fund Ltd., Hargreave Hale AIM VCT 2, Hotel Corp., Johnson Service Group, Just Car Clinics Group, Kerry Group 'A' Shares, Maven Income & Growth 2 VCT, Mears Group, Northbridge Industrial Services, Old Mutual, Public Service Properties Inves (DI)tments Ltd., Puma VCT III, Puma VCT IV, Rightmove, S & U, Smith & Nephew, Spirax-Sarco Engineering, Staffline Group, Tesco, Travis Perkins, Unite Group, Walker Greenbank, WPP, Yule Catto & CoQUARTERLY PAYMENT DATEXP Power Ltd. (DI)QUARTERLY EX-DIVIDEND DATEF&C Commercial Property Trust Ltd.INTERNATIONAL ECONOMIC ANNOUNCEMENTSMachine Orders (JPN)Consumer Prices Index (FRA) (06:30)Current Account (FRA) (07:45)Industrial Production (EU) (10:00)MBA Mortgage Applications (US) (12:00)FINALSCeres Power HoldingsANNUAL REPORTCAP-XX Ltd.IMSSFresnillo, Travis PerkinsSPECIAL EX-DIVIDEND PAYMENT DATETR European Growth TrustAGMSCambium Global Timberland Ltd., Goodwin Plc, Kirkland Lake Gold Inc., MonitiseTRADING ANNOUNCEMENTSBurberry GroupUK ECONOMIC ANNOUNCEMENTSClaimant Count Rate (09:30)Unemployment Rate (09:30)FINAL EX-DIVIDEND DATEAnimalcare Group, Close Brothers Group, CPL Resources, Daejan Holdings, Hargreaves Services, Hays, Henderson EuroTrust, Jupiter Primadona Growth Trust, Murgitroyd Group, Quayle Munro Holdings, TR European Growth Trust, Wolseley