Burberry Kicks Off Share Buyback Program
Burberry (BURBY) on Wednesday kicked off one of its initiatives to woo back investors with the launch of a share buyback worth up to £100 million ($131 million).
Burberry has charged Morgan Stanley with handling the repurchase, which follows a May announcement that it would buy back up to £150 million of shares in the current fiscal year. It will begin on July 20 and end by April 18, just after its fiscal 2017 year ends.
The May announcement came as it reported a 10% decline in fiscal 2016 underlying pretax profit to £421 million ($551.5 million) and underlying sales that were down 1% at £2.5 billion. At the time it also said would slash £100 million from its costs over the next three years, equivalent to 10% of its operating costs.
Since then Burberry has also overhauled its board, demoting CEO Christopher Bailey, whose dual role as boss and chief creative officer had previously raised eyebrows, and replacing its CFO and chief operating officer with Smith & Nephew finance chief Julie Brown. And last week it said first-quarter same-store sales fell a less-than-expected 3%, with Asia Pacific, aside from Hong Kong and Macau, posting overall revenue growth. It also said it expects another £40 million in currency benefits from the weaker pound in the full year.
Marco Gobbetti, who leads LVMH's (LVMUY) fashion brand Celine, will take the helm at Burberry as early as possible next year, and Bailey will become president and chief creative officer.
Burberry shares in London on Wednesday morning were up marginally, trading 0.8% higher by mid-morning at 1,285 pence. Burberry has a market value of £5.7 billion.
The stock has lost 17% in the past year, while LVMH has fallen 14%.
A Burberry spokesman said additional returns to shareholders would be kept under regular review. He wouldn't comment on the £150 million ceiling Burberry previously set.