Buxton pick Burberry boosts dividend

Luxury fashion group Burberry, a top ten holding in Richard Buxton’s Schroder UK Alpha Plus fund, has lifted its dividend after posting strong financial results.

Richard Buxton
Richard Buxton

The company’s interim management statement shows adjusted profit before tax was £162m for the six months ending September 30, a 26% increase on the same period one year before. Reported profit before tax was £159m.

Revenue for the six months rose by 29% to £830m, although net cashflow eased slightly from £181m a year ago to £174m in the most recent period.

The company says it will lift its interim dividend by 40% to 7p a share.

The statement says Burberry achieved “consistent double-digit revenue growth” in retail, wholesale, all regions and all product divisions over the six months. Emerging markets accounted for 19% of retail and wholesale revenue, rising from 13% last year.

Burberry makes up 3.2% of the £2.5 billion Schroder UK Alpha Plus fund’s portfolio. In a fund update earlier this month, Buxton highlighted the recent performance of the stock, saying it has “rebounded strongly on the back of improved market sentiment”.

Despite the results, the stock was down 3.73% at 0836 GMT to 1,368p.

The Share Centre currently lists Burberry as a sell stock. Nick Raynor, an investment adviser at the online broker, explains: “The current valuation of the share price still looks high and this was the reason behind the recent downgrade of our recommendation to a ‘sell’.”

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