FTSE 100 Live: Stocks in bullish mood; Burberry in fashion

Proactive Investors –

FTSE 100 up 53 points at 7,726
Games Workshop soars on strong trading
Chinese economic data better than hoped
Burberry in fashion ahead of Daniel Lee launch

Burberry Group PLC (LON:BRBY) shares are up 2.6% at 2,167p supported by the better economic news from China – which is a big buyer of luxury goods – and ahead of Daniel Lee Spring-Summer show on September 18.

Broker Stifel notes the “long-awaited” new collections and products from new designer Daniel Lee arrived in stores earlier this month, backed by increasing marketing intensity with the new show coming on Monday.

The broker thinks Burberry’s marketing is more on point “in communicating its new brand aesthetics.”

This includes new brand signifiers across products, the launch of its Burberry Streets initiative in London this week (soon to be followed by Seoul and Shanghai), a revamped website and a recently reopened Bond Street flagship store.

It reckons Burberry seems well-placed to narrow the sales momentum gap with sector leaders.

“Price architecture now appears to be in line with its targeted peers,” ir said, adding “and the brand fundamentals look more solid than they did five years ago.”

It has a buy rating and 2,500p price target

Daniel Lee’s Spring-Summer 2024 show is due next Monday 18 September. • While the external environment in China, Europe and the US looks unfavourable near term, we see several positive changes at Burberry. The main investor debate remains whether these changes will be enough for Burberry to narrow the top-line performance gap versus the sector’s best performers from 3Q24.

Goldman holds Chinese GDP forecast after robust data

Goldman Sachs (NYSE:GS) has left its economic growth forecast for China unchanged after today’s economic data.

“Taking into consideration the stronger-than-expected August activity data….we maintain our Q3 GDP growth forecast at 4.9% yoy, despite elevated uncertainties around the property sector,” the US investment bank said.

The bank pointed out August activity data mostly improved from July and beat market expectations.

Industrial production growth rose in August amid improved export growth, driven mainly by faster output growth in computers, chemicals and automobiles.

Year-on-year growth in retail sales and the Services Industry Output Index both rose in August, thanks mainly to stronger auto and gasoline sales, although Covid-sensitive restaurant sales growth slowed.

Fixed asset investment growth increased in August, led by manufacturing and infrastructure investment, but the magnitude of improvement was slightly smaller than expected, due partly to the prolonged drag from depressed property investment.

Property-related activity remained sluggish in August despite the ongoing piecemeal housing easing, it pointed out.

Whitbread lifted by upbeat analyst comments

Whitbread is the subject of some positive broker commentary today and the shares have joined in the market rally, rising 0.9% to 3,673p, taking the increase year-to-date to 37%.

Citi has increased its price target to 4,500p from 4,000p after hosting Whitbread’s head of investor relations at its growth conference.

Citi noted even though September’s RevPAR has started sequentially weaker for most regions, UK economic trends remain the strongest.

As a result, it has taken a more optimistic view for the rest of the financial year 2024 and raised finan cial year 24/25/26 adjusted Ebit estimates by 10%/8%/4%, which drives the new 4,500p price target.

Whitbread (LON:WTB) sees demand outlook in the UK remaining robust, despite the weak macro economic environment, while revPAR strength is seen a consequence of structural supply dynamics as independents have exited the market, Citi said.

The owner of Premier Inn pointed to supply constraints continuing given rising interest rates.

Barclays (LON:BARC) was also upbeat on Whitbread which is its preferred pick in leisure.

“We believe UK RevPAR strength is more sustainable than the market expects when we reflect on: 1) optimistic spend intentions from our latest consumer survey, 2) constrained supply, 3) UK pricing still 13% below 2007 peak in real terms and 4) PI’s own pricing opportunity,” it said.