Burberry's Q2 results should provide investors with some confidence

As Burberry reports first half results Sheridan Admans, investment research manager at The Share Centre, explains what it means to investors.

"This morning, Burberry announced Q2 revenue increased by 8% on an underlying basis and although footfall fell, sales saw support from the higher end spenders. This improvement should come as a relief to investors after the profit warning issued in September, off the back off a slowdown in the Chinese economy limiting its earnings visibility. 

"Whilst the results should provide investors with some confidence, Burberry still faces a number of challenges; such as the cost of bringing the fragrance licenses in-house and its rapid expansion plan could face stern scrutiny as global growth slows and the impact it is having on consumer discretionary spending.

"Although we like Burberry as a company, we remain extremely vigilant of the economic headwinds especially with the European crisis dragging on and Chinese growth continuing to moderate. The share price has had a very good run over the last few years and any bad news may result in a fair amount of profit taking from investors. We continue to recommend investors ‘hold' Burberry."

For more information, visit share.co.uk.