Here’s why Brexit might not be so bad for? Burberry
Most analysts are saying that the UK?s vote to leave the European Union will damage almost every retail sector in Europe across the board. It makes simple sense: A weaker British Pound means that British companies will spend more on production costs in other countries, and will have to pass on those expenses to the shoppers by raising prices; if it?s harder for other EU citizens to visit England, it may also cut down on shopping by European tourists. There?s good reason 90% of the members of the British Fashion Council wanted to stay in the union, and why British fashion designers are vocally unhappy about the vote.
But while Brexit is ?a negative for the sector overall,? according to a new note from RBC Europe Limited, it is merely ?mixed? for Burberry Group. ?The real beneficiary of a weakening GBP should be Burberry,? says analyst Rogerio Fujimori in the note. ?Currency fluctuations tend to shift travel flows and luxury purchases around the globe: A weakening GBP may shift overseas tourist flows to the UK, which would benefit Burberry Group.? You may have seen this thesis already in other contexts?that while the plummeting pound is bad for Brits, it?s nice for foreigners who?d like to visit England. It means your trip to London will be a lot cheaper. So Burberry?s eventual higher costs may be offset by American tourists buying up Burberry threads in England.
Burberry?s exposure to the pound is an important part of this. It sees about 14% of its revenue in pounds, 15% ...
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