JP Morgan places Burberry on 'negative catalyst watch'

The bank said that, following results from others in the sector so far, the upside surprise to numbers has been limited, with Moncler and Hermes accounting for most of the positive performances.

"Our client conversations continue to focus on the debate of what normalisation will look like in H1 this year [...], and what the catalyst to drive further sector re-rating may be given no real profit growth in H1 and already positive expectations embedded for H2," JP Morgan said.

"The key take from earnings, similar to this stage in previous cycles, is that brand momentum is increasingly important to navigate in this environment, creating a growing divide between the winners and the laggards. In this context, we add Ferragamo and Burberry to Negative Catalyst Watch into their FY results updates."

Burberry, which is due to report its full-year results in May, delivered a profit warning to the market in January – its second in three months – on the back of a major luxury-market slowdown, saying that adjusted operating profits for the 12 months to 30 March will be between £410m and £460m, below previous guidance.

The bank continues to see Richemont as the best pick in the sector due to its "jewellery exposure and solid brand momentum".

Burberry shares were up 0.4% at 1,290p by 1003 GMT, with the stock having fallen by 41% over the past six months.