By Andrea Figueras
Shares in Burberry jumped on a report that Moncler could be considering a bid for the U.K. trench coat maker, which is currently pursuing a turnaround.
According to a report published in Miss Tweed, an independent Paris-based medium focused on fashion and luxury, the Italian maker of upscale puffer jackets could make an offer for the British group with an eye on creating a specialized outdoor giant.
"Moncler does not comment on unsubstantiated rumors," the Italian company said. Burberry also declined to comment on what it called speculation.
The report sent Burberry shares higher. Shares in the company, whose market capitalization is about 3.05 billion pounds ($3.95 billion), rose 4.8% to 850.80 pence in morning trading, leading the FTSE 250 risers, after gaining as much as 8% earlier in the session. But shares are down 40% year-to-date, as the company continues to struggle with a brand revamp.
According to Miss Tweed, Bernard Arnault, one of the most powerful figures in the luxury sector as chief executive of LVMH, would be keen to see such deal to happen. In September, LVMH said it was investing in Moncler in a transaction that would give it a seat on the board of the Italian group.
The news comes at a time when Burberry faces significant challenges. In July, it replaced its chief executive and appointed Joshua Schulman, who previously headed fashion brand Michael Kors.
At the time, AJ Bell analyst Dan Coatsworth could become the target of an opportunistic bidder given the low share price, stuttering revamp and poor economic climate.
Similar to many rivals, Burberry is facing a downturn in demand for high-end goods. The slowdown has affected companies unevenly, leaving unharmed those exposed to a more affluent clientele that continues to splurge on luxury. Others such as Burberry are grappling with a more difficult environment, as they cater to less affluent and younger consumers who have cut back on spending.
Burberry is also exposed to China, which for years fuelled the industry's fortunes but that now faces economic malaise, prompting shoppers to curtail luxury purchases.
The landscape has complicated the U.K. group's plans to turn around its brand. In late 2022, the company appointed Daniel Lee as creative director, but there are still no signs of improvement, as the brand continues to lose appeal among consumers.
As for Moncler, the company reported a decline in revenue for the third quarter, citing lower demand in Asia and Europe. The Italian company was one of a few luxury names that had until then managed to weather woes in Asia.
Write to Andrea Figueras at andrea.figueras@wsj.com
(END) Dow Jones Newswires
November 04, 2024 05:43 ET (10:43 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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