Mulberry (MUL) & Burberry (BRBY): 2 fashion retail stocks to buy

Highlights 

  • Global luxury fashion market is estimated to grow by CAGR 5.66 per cent from 2021 to 2026.
  • Mulberry’s revenue rose by 34 per cent to £65.7 million on a year-on-year basis, for the 26 weeks period ended on 25 September.
  • Burberry group’s revenue rose by 38 per cent on a reported FX basis to £1,213 million in H1 2022, for the 26 weeks ending on 25 September.

The majority of the fashion retail companies have seen a recovery in their latest financial performance due to the UK economy’s recovery after the pandemic.

It is being said that the global luxury fashion market is poised for a huge boom in the coming years with a lot of pent-up and fresh demand. The sector is estimated to have a global market size of about US$ 153.97 billion by 2026, growing by 5.66 per cent on a CAGR basis between 2021 and 2026, according to a recent report from market intelligence firm, ResearchAndMarkets.com. The luxury fashion sector had a market size of US$ 110.64 billion in the last year.

Let us take a look at 2 FTSE listed stocks from the sector and explore their investment prospects:

  1. Mulberry Group PLC (LON: MUL)

AIM-listed and a constituent of the FTSE AIM All-Share index, Mulberry Group is a UK based luxury fashion business. The company published its half-year report, for the 26 weeks period ended on 25 September.

The group’s revenue during the period rose by 34 per cent to £65.7 million, compared to £48.9 million, in the same period in 2020.

It returned to a profit in the period, reporting a profit before tax of £10.2 million (inclusive of a one-off profit of £5.7 million for its Paris lease disposal), compared to a loss before tax of £2.4 million in the previous year. 

The group estimates its gross margin in H2 2021 to be around or a little higher than its H2 2020 gross margin of 67 per cent.

MUL share price and volume

Image source: Refinitiv

The company’s shares were trading at GBX 370.00, up sharply by 22.52 per cent on 24 November at 10:39 AM BST, while the FTSE AIM All-Share index was at 1,200.11, down by 0.56 per cent.

The company’s market cap was at £181.43 million as of Wednesday.

The group has given shareholders a year to date return of 72.48 per cent as of 24 November.

  1. Burberry Group PLC (LON: BRBY)

Burberry Group is another luxury fashion retail brand in the UK. The company is a part of the FTSE 100 index.

The company appointed Danuta Gray as a non-executive director of the board, as well as a member of the remuneration and nomination committees on Tuesday. The appointment comes into effect from next month on 1 December.

The group’s revenue rose by 38 per cent on a reported FX basis to £1,213 million in H1 2022, for the 26 weeks ending on 25 September as compared to £878 million for the period ending on 26 September 2020.

The group estimates its FY 2022 wholesale to be up around mid 30 per cent and forecasts its H2 2022 wholesale to be around 15 per cent.

 BRBY share price and volume

Image source: Refinitiv

The company’s shares were trading at GBX 1,885.50, lower by 0.63 per cent on 24 November at 10:39 AM BST.

In comparison, the FTSE 100 index was at 7,272.57, up by 0.08 per cent. The company’s market cap was at £7,684.07 million as of Wednesday.

The group has given shareholders a return of 13.31 per cent as of 24 November

Comment


Disclaimer