Burberry Delivers Solid Q2 2020/2021, Helped by Asia and the Americas; Shares Slightly Undervalued

We are maintaining our fair value estimate for narrow-moatBurberry Group as the company reported solid trading trend improvements in the secondquarter. Although total sales for the first half of the year were just shy ofour estimates of GBP 898 million at GBP 877.7 million, this was primarilydriven by weaker wholesale (negative 38% for the first half versus negative 30% we expected)but better retail trends as retail sales were down only 6% in the quarterversus the 10% decline we anticipated. This was also significantly better than thecompany’s guidance of a 15%-20% decline in comparable sales. Retail comparablesales returned to growth in October, helped by continuing momentum across regions. Sales on burberry.com almost doubled in the second quarter.