Is Moncler plotting a bid for Burberry?
Speculation around a possible bid by Italian luxury brand Moncler for British fashion house Burberry has stirred interest, sending Burberry’s shares up nearly 5 per cent this week.
A report from fashion news outlet Miss Tweed suggested Moncler might be eyeing Burberry as a step toward creating a “high-end outdoor fashion powerhouse”.
However, both Moncler and Burberry declined to comment on what they called market speculation.
“Moncler does not comment on unsubstantiated rumours,” the Italian label remarked, while Burberry referred to the situation as “speculation.”
In recent years, Burberry has faced an uphill battle to rejuvenate its brand, with a share price that has dropped 40 per cent this year and declining sales.
AJ Bell analyst Dan Coatsworth noted that could be a takeover target, especially in a challenging economic climate where consumer demand for high-end goods wanes.
“Given the low share price, stuttering revamp, and poor economic climate, Burberry could become the target of an opportunistic bidder,” he explained.
The luxury market has been divided, with brands targeting affluent consumers faring better than those, like Burberry, that cater to younger, more aspirational shoppers who have pulled back on spending.
HSBC analyst Aurelie Husson-Dumoutier said Burberry’s outlet exposure also jeopardised its strategy to elevate the brand.
Burberry has several outlet stores in China, Japan, the UK, and the US to clear excess stock, sell previous-year collections of its classic trench coats, and check pattern scarves and bags at steep discounts.
“A trench coat from the 2019 collection is not that different to the 2024 collection, so if I can buy it at half the price, why wouldn’t I?” she added.
Moncler is also experiencing a downturn, albeit minor, with sales falling by 3 per cent, citing a dip in demand across Asia and Europe.
In September, LVMH took a stake in Moncler and secured a seat on its board, which some analysts view as a strategic alignment to support the latter’s acquisition targets.
“If Burberry were to go down the premium brand route (like Coach), the price-to-earnings multiple the market applies to these brands could be half that of true luxury players,” said Bank of America analyst Ashley Wallace.
“The complication is that Burberry is a little bit in the middle right now.”
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