Billionaire Frere Lifts Burberry Stake After Share Plunge

Updated on
  • Belgian investor increases holding to 6 percent from 4 percent
  • Burberry recoups some losses that followed strategy update

Billionaire Albert Frere raised his stake in Burberry Group Plc a day after the U.K. trench-coat maker’s shares fell 10 percent on disappointment over new Chief Executive Officer Marco Gobbetti’s strategic plan.

The Belgian investor increased his holding to 6 percent from 4 percent, Burberry said in a statement Friday. The U.K. fashion company’s shares pared losses to 1.6 percent from 4.3 percent earlier in the day.

Frere, a longtime business associate of LVMH CEO Bernard Arnault, previously increased his Burberry interest to 4 percent in July after disclosing a 3 percent holding in February. His Groupe Bruxelles Lambert SA holds stakes in a range of companies, including Total SA and Pernod Ricard SA of France.

Burberry shares plunged Thursday after Gobbetti said the London-based company will expand its lineup of accessories and leather goods and revamp its marketing while investing in store refurbishments, which will cause revenue and the operating margin to remain flat for the 2019 and 2020 fiscal years.

Earlier in the week the stock hit a record after Kevin Wills, the CEO of Tapestry Inc., said the U.S. fashion and leather-goods maker formerly known as Coach is seeking strategic acquisitions.

Frere’s share purchases come amid a flurry of deal-making in the luxury industry, with the Reimann family’s JAB Holding Co. selling jacket brand Belstaff to U.K. chemicals entrepreneur Jim Ratcliffe and offloading Jimmy Choo shoes to Michael Kors Holdings Ltd., while the then-Coach added Kate Spade & Co. Burberry has previously been the subject of takeover speculation.

Gobbetti’s plan to move the British brand upmarket, establishing it as a first-tier luxury label, could cut earnings by 15 percent for fiscal 2019 and 2020, Morgan Stanley analyst Elena Mariani said. Meanwhile, it’s searching for a new creative director to succeed Christopher Bailey, who plans to leave next year.

— With assistance by Richard Weiss

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