Stock prices for Burberry surge following signs of abatement in tariff conflict
🌐 Recently, the US-China tariff deal has sent Burberry's stock soaring! With both nations agreeing to slash import tariffs by 15%, luxury shares worldwide, including Burberry, have seen a surge.
📈 Early this morning, Burberry's share price leaped more than six percent, following a nearly 20% increase over the past month. This bullish move comes just days before the luxury giant announces its yearly results on Wednesday, May 14th.
🦭 Luxury stocks took a beating in the aftermath of US President Donald Trump's 'Liberation Day' on April 2, with worries about China's slowing growth and decreased demand for luxury items. In fact, Chinese luxury-goods sales saw a steep decline of about 20% in 2024, as per a Bain report.
✨ However, following the new tariff deal, both the US and China have agreed to slash their tariffs drastically. US tariffs will drop from 145% to 30% on Chinese goods, with a 20% tariff maintained from previous administrations. China, in turn, will reduce its 125% retaliatory tariffs to 10% on US goods.
🌱 This development couldn't come at a better time for Burberry, which is currently rejuvenating its business with a wide-ranging turnaround plan. The British brand boasts significant exposure to shoppers in Asia, and its popularity in the US continues to grow with its iconic styles, such as trench coats and scarves.
🔎 RBC analysts have previously pointed out that Burberry's sourcing mix, which covers the countries and suppliers used to produce the luxury brand's goods, can have an "elevated tariff impact." With tariffs now easing, Burberry stands to benefit from reduced costs in its supply chain.
💼 On the financial front, analysts predict that Burberry will report an operating loss of roughly £7 million for the year ending March 2025, but eke out a profit of £11 million on an adjusted basis. Despite this, the market still harbors some apprehension given the company’s recent performance and the ongoing market uncertainty.
📊 Technical analysis suggests that Burberry needs to break through certain resistance levels (838p to 930p range) to ensure sustained recovery, while short-term momentum remains positive as long as the share price remains above lows around 715p.
💰 All in all, the US-China tariff deal has created a more favorable environment for Burberry's Asia exposure, sourcing, and financial results. However, the company's executional success in its strategic turnaround plan and market conditions worldwide will ultimately determine its long-term prospects. Keep a close eye on Burberry as they reveal their full financial results in mid-May! 🍿🚀💼💃🏽
Stocks in the finance industry experienced a surge following the US-China tariff deal, including luxury brands like Burberry. The easing of tariffs could reduce costs in Burberry's supply chain, potentially benefiting its business and financial results.
