Burberry's ( LON: BRBY ) share price is in a steep freefall as concerns about the luxury market continue. The stock crashed to a low of 1,135p on Tuesday, its lowest point since 2020. It has retreated by over 56% from its highest level in 2023, giving it a market cap of over £4.7 billion.
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Burberry's stock has been in a freefall in the past few months after the company warned about its slowdown in key markets like China. In a recent trading update , the company said that its retail revenue retreated by 7% in the fourth quarter to £706 million. Its comparable store sales were minus 4%.
The company also warned that its full-year financial results would be weaker than its previous guidance. These numbers mean that its business is facing substantial headwinds as the management implements the new strategy that seeks to boost its revenue to £4 billion.
The management also believes that its adjusted operating profit margin will expand to 20% in the medium term.
Burberry's share price will be in the spotlight on Wednesday as investors reflect on the weak LVMH earnings . In a statement on Tuesday, the company said that its like-for-like sales in Asia ⁘ excluding Japan ⁘ crashed by 6% in the first quarter. Revenue in other places like the US and Europe rose by 2%.
I believe that Burberry would be a good acquisition target by either a bigger name like LVMH or a private equity firm. Its valuation has improved recently and its brand can be turned around in the long term.
