Burberry’s results good, but not good enough for investors

Nick Raynor, investment advisor at The Share Centre explains why Burberry's results have prompted a Share Centre downgrade to a ‘sell'.

"This morning Burberry, the luxury international brand reported a 21% jump in underlying sales for the six months to 30 September 2010.  This growth was mainly driven by leather goods and coats (especially its Aviator jackets, which cost up to £2,500 and are the A/W fashion pack jacket of choice), primarily from the Asia Pacific region, where revenues rose 37%.  The company also adjusted its full year forecasts upwards.

Nick Raynor, however, is unconvinced about the figures as Burberry did report that sales were slowing.

"Although Burberry cautiousness is understandable in the current climate, we feel that bid speculation is keeping the share price above 1000p and current figures are not backing up the share price.  We therefore downgrade Burberry to a sell".