Burberry tanks as Belgian billionaire Albert Frere sells entire stake

Luxury fashion brand Burberry was under the cosh on Wednesday after Groupe Bruxelles Lambert, the holding company of Belgian billionaire Albert Frere, sold its entire 6.6% stake in the group.

GBL sold 27.6m shares in a placing managed by Goldman Sachs, raising around £498m.

It said the divestment of the Burberry stake is part of its "dynamic strategy in terms of portfolio diversification" and allows it to realise a capital gain.

"The proceeds from the disposal will be redeployed into other investments, in line with GBL’s portfolio diversification strategy," it said.

But Berenberg said in a note that such an early disposal was not in line with GBL's long-term investment strategy. However, it should not be seen as an indicator of any deterioration in the company's fundamentals or a change in the equity story.

"GBL is not on the board of directors at Burberry and, having passed the 3% ownership threshold in February 2017 only after the FX-related share price rally, it may have missed the opportunity to secure a bigger stake.

"In particular, we believe that Burberry had already implemented almost all of the changes that an activist investor may have felt were needed for the company (eg the management reshuffle, a structural cost story and an increase in returns to shareholders) before GBL had a meaningful stake in the business."

Berenberg said the stake sale does not change its fundamental stance on the stock, which it rates at 'buy'.

"We continue to believe that, for investors looking for turnaround names, Burberry offers one of the most exciting restructuring stories in the luxury goods sector. Due to its strong brand, low retail productivity and low penetration in the leather goods category, we think there is more scope for revenue growth."

Any extended share price weakness on Wednesday is a buying opportunity, Berenberg added.

At 1050 BST, the shares were down 5.6% to 1,775.50p.