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Burberry Group PLC BRBY

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Morningstar’s Analysis

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Several Apparel Brands Hit by Controversies Over Xinjiang Supplies; Maintaining Valuations for Now

Jelena Sokolova, CFA Equity Analyst

Analyst Note

| Jelena Sokolova, CFA |

We are maintaining our fair value estimates for H&M, Burberry and Hugo Boss following the controversies in China in relation to sourcing cotton from Xinjiang suppliers allegedly involved in forced labour. H&M and Burberry were among European apparel firms we cover that have spoken out against sourcing from the region, which caused frustration among Chinese Internet users. Hugo Boss was also sourcing from the region. As a result, H&M was taken off all major Chinese e-commerce websites, its physical stores can no longer be found on major mapping service applications, and two celebrity ambassadors have stopped collaborating with the brand. Burberry’s collaboration with Tencent to design costumes for the popular game Honour of Kings was cancelled.

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Company Profile

Business Description

Burberry, a British luxury monobrand which is more than 160 years old, is best known for its outerwear and signature plaid. It has a global presence with 37% of revenue generated in Europe, 40% in Asia, and 23% in North America. The Chinese are Burberry’s most important customers, accounting for more than 30% of sales at home and abroad. Apparel contributes about 62% of sales.

Contact
Horseferry Road, Horseferry House
London, SW1P 2AW, United Kingdom
T +44 2033673524
Sector Consumer Cyclical
Industry Luxury Goods
Most Recent Earnings
Fiscal Year End Mar 28, 2021
Stock Type
Employees 10,161