Despite the celebrations last month as it made fresh all-time highs, not all constituents have enjoyed a similar uplift. In fact, some stocks are heavily down in the short term, raising the question of whether there are some bargains to be had now, despite the success of the broader index. The lowdown One that has come on my radar is (LSE:BRB).
The luxury fashion powerhouse might be an enduringly popular brand, but the share price hasn’t been in vogue recently. The stock is down 14% over the past month, making it one of the worst performers on the index. Over the past year, the story doesn’t get any better.
It’s down 55% over this period, making fresh 52-week lows. Before I consider if it’s a bargain or not, I need to understand how we got into this situation in the first place. Part of the problem isn’t just with Burberry, but with a general slowdown in luxury spending.
High interest rates and low economic growth in many developed countries have caused even the affluent to tighten their belts when it comes to spending. Further, for the average person on the street who might occasionally buy a luxury piece of clothing, it has become a lot more unaffordable with inflation pushing prices up. Burberry has struggled in this environment, issuing several profit warnings over the past year.
This clearly is a red flag for investors, hence the fall in the stock. The 2023 results showed a dip in revenue, but the main impact was felt on the bottom line. Profit after tax fell f.
