Companies roundup: Burberry and consumer confidence

A 4 per cent drop in like-for-like sales for the quarter covering Christmas would be seen as a negative for most clothing retailers but shares in Burberry (BRBY) rallied by 15 per cent in early trading as the fall was better than investors had feared.

The consensus forecast from analysts was that Burberry’s sales would be down by 12 per cent. Piral Dadhania of RBC Capital Markets said the figure represented a “material acceleration on the prior quarter run rate”, when sales were 20 per cent lower.

Management said they had begun to implement turnaround measures that had generated “an improvement in brand desirability”.

This means it “is now more likely our second half results will broadly offset the first half adjusted operating loss, notwithstanding the uncertain macroeconomic environment”.

Comparable store sales were still 9 per cent lower in China and 2 per cent lower in Europe, the Middle East and Africa, but they were up 4 per cent in the Americas. MF

Consumers save for a rainy day

Consumer confidence fell sharply in January, with people expressing more concern about their own finances and the general state of the economy, according to GfK.

The researcher’s consumer confidence index hit a 13-month low in January, with survey respondents putting more away in savings and spending less on major items.

“New Year is traditionally a time for change, but looking at these figures, consumers don’t think things are changing for the better,” said Neil Bellamy, consumer insight director at NIQ GfK.

The result “echoes a chorus of surveys reporting weakening consumer and corporate sentiment, as payroll tax hikes, rising bond yields and surging global economic uncertainty following [Donald] Trump’s election weigh,” said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics.

However, he said that some surveys exaggerate the weakening of sentiment, and that he expected confidence to pick up as real wages grow – particularly following the “large minimum wage hike” due in April. MF

Renew shares plunge on profit warning 

Rail and water engineering specialist Renew Holdings (RNWH) has announced its current financial year will likely see profits below market expectations, causing a 23-per-cent fall in its share price. The company’s rating has been on a downward slope since its last full-year results in November. Renew said the current financial year, ending 30 September, had been knocked by slower rail spending. 

“Given the ongoing challenges with delay and deferment in our rail activities and more recent uncertainty over the timing of the commencement of a number of renewals programmes, the board anticipates full year trading will be below market expectations,” the company said, although highlighted that operating profit was still set to climb on last year’s £70.9mn. AH