Burberry's shares experienced a surge this morning following the announcement of a tariff agreement between the US and China, which has positively impacted luxury stocks globally.
The luxury behemoth saw its share price increase by over six per cent in early trading, marking a nearly 20 per cent rise over the past month, as reported by .
This uplift, occurring just before Burberry's annual results on Wednesday, mirrors gains for LVMH, Moncler and Kering on the Euronext exchange.
LVMH's shares have increased by more than seven per cent, while Hermes and Kering have seen rises of 4.4 per cent and 6.4 per cent respectively.
º£½ÇÊÓƵ stocks had previously suffered due to US President Donald Trump's 'Liberation Day' on April 2, amid concerns that slower growth in China would hinder the recovery of the luxury sector.
Chinese luxury goods sales dropped around 20 per cent in 2024, according to a report by Bain, one of two main factors contributing to the slowdown in luxury goods.
The other factor was a decrease in demand from Europe's aspiring middle class.
Burberry's Asia exposure
Bernstein analyst Luca Solca revised his annual growth forecast for the luxury goods sector following the tariffs, predicting a contraction of two per cent year-on-year, compared to an earlier projection of five per cent growth.
However, this morning brought news of an agreement between the US and China to reduce tariffs on each other. US trade representative Jamieson Greer informed reporters in Geneva that reciprocal tariffs now stand at 10 per cent each.
In a significant shift in trade relations, the US is set to reduce its existing 145 per cent tariff on Chinese goods to 30 per cent, with an ongoing 20 per cent tariff from past administrations still applicable. In response, China has agreed to lower its 125 per cent retaliatory tariffs to just 10 per cent on US goods.
This development spells particularly positive news for British luxury fashion house Burberry, which is currently implementing a comprehensive turnaround strategy to rejuvenate the brand following several years of sluggish performance.
With substantial market presence in Asia and increasing sales in the United States, buoyed by the enduring appeal of its iconic trench coats and scarves, Burberry is well-positioned to benefit from these easing trade tensions.
Prior analysis by RBC had highlighted the "elevated tariff impact" that Burberry was facing due to its unique sourcing mix – the blend of countries and suppliers tasked with crafting the brand's high-end products.
Burberry is expected to unveil its full-year financial results on May 14. Industry analysts anticipate the company will disclose an operating loss of around £7m for the year up to March 2025, yet still manage to achieve an adjusted profit in the region of £11m.
