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Beverly Chandler

The Valentine’s Day gift that keeps on giving

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With Valentine’s Day approaching, Interactive Investor asks which luxury brand’s shares have best survived the market turmoil of this year so far.

 The firm writes that luxury shares have suffered more than most in the past 12 months, in particular due to concerns about consumer sales in China. “However, with valuations so low, a Valentine’s Day gift of shares in Tiffany, Ferrari or Jimmy Choo might make a better present. Though not quite as romantic, they may prove to be a better investment for savvy star-crossed lovers over the long term.”
 
UK luxury shares such as Burberry, down 33 per cent over past 12 months; Rolls Royce, down 44 per cent over past 12 months; Mulberry, down 12 per cent over past 12 months and Jimmy Choo, down 22 per cent over past 12 months, all show the impact of the potential loss of the Chinese shopper.
 
US luxury firms have fared little better with Ralph Lauren down 38 per cent over past 12 months); Tiffany & Co, down 27.5 per cent over past 12 months, and Ferrari, down 25 per cent since launch)
 
Mike McCudden, Head of Derivatives at Interactive Investor, says: “With fears over a slowdown in global growth impacting luxury shares over the past year, it could be time to revisit the sector in time for Valentine’s Day. Despite the likes of Burberry and Rolls Royce being hammered by over 30 per cent and high profile names like Ralph Lauren issuing profits warnings, the bad news may now be priced in.
 
“Recent luxury sector upgrades from Goldman Sachs have also given investors the nod to revisit the sector. Despite Chinese weakness there is still a rapidly growing middle class who want to be seen with designer shopping bags and these luxury brands still have huge scope to capitalise on this lucrative market. So perhaps this Valentine’s Day, (if you’re willing to risk the possibility that you might be sleeping in the shed for a number of nights…) a nice card with a share certificate inside for one of these companies could win your loved one over?
 
“My Valentine’s Day ‘one to watch’ is Burberry Group, which despite terrible performance in the last 12 months, has recently produced a robust set of results, bucking the trend despite on-going global turmoil. The share price appears to have broken out of its negative technical trend, which is always a good sign for investors.”  

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