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Burberry Surges as Billionaire Albert Frere Buys 3% Stake

Updated on
  • Belgian investor adds to luxury holdings with Burberry stake
  • Frere, partner invest as new CEO prepares to take over

Burberry Group Plc shares surged in London after billionaire Albert Frere disclosed a 3 percent stake, sparking speculation that the Belgian investor will push for measures to boost earnings at the U.K. trenchcoat maker.

Frere, a longtime business associate of LVMH Chief Executive Officer Bernard Arnault, is buying into Burberry via Groupe Bruxelles Lambert SA , an investment firm that owns stakes in energy company Total SA and drinks provider Pernod Ricard SA. The U.K. company’s shares rose 3.7 percent at the close of trading in London to the highest level since May 2015.

“Burberry has always been a good candidate for activist investors,” Zuzanna Pusz, an analyst at Berenberg, said in a note, citing a need for increased cost discipline at a company that is seeking to rebound from two years of declining profit.

The investment comes at a pivotal time for the U.K. luxury brand, as CEO Christopher Bailey prepares to hand over to Marco Gobbetti, former head of LVMH-owned luxury brand Celine, in July. Alongside other luxury-goods companies, Burberry has reported signs of recovery in key markets like China.

Frere is known for pushing managers to perform. In 2015, GBL bought a stake in Adidas AG, and since then shares of the sportswear maker have roughly doubled.

Hugo Boss

News of the investment in Burberry weighed on shares of German clothier Hugo Boss, which fell 3.4 percent to 64.98 euros. Boss had soared earlier this month on a Manager Magazin report, which was never confirmed, that GBL had taken a stake. Investors may now think 91-year-old Frere bought a stake in Burberry rather than Boss, Pusz said.

“It seems that Albert Frere is quite active in the space,” said Exane BNP Paribas analyst Luca Solca. “It indicates that investors are overall constructive about what could come to luxury-goods companies.”

Frere is an independent director of LVMH and invested in Bordeaux’s Chateau Cheval Blanc wine estate alongside Arnault. The investment in Burberry was made by an investment vehicle controlled by Frere and a business partner, the Desmarais family of Canada, according to a statement.

— With assistance by Thomas Buckley, Charlotte Ryan, and Heather Burke

(Updates with analyst comment in penultimate paragraph.)
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