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Trending tickers: Burberry, Imperial Brands, Boeing and Oracle

The latest investor updates on stocks that are trending on Wednesday

Models present creations at the Burberry catwalk show during London Fashion Week in London, Britain, February 19, 2024. REUTERS/Hollie Adams     TPX IMAGES OF THE DAY
Burberry is struggling as Chinese customers have turned away. (REUTERS / Reuters)

Burberry profits plunged as Chinese consumers turned away from the luxury retail industry at the start of this year.

The fashion brand saw its pre-tax profit tumble by 40% last year, closing at £383m ($483m) for the year ending March 30, with underlying earnings also down by 34%.

In the year to the end of March, its operating profit dropped by 36% to £418m.

Like-for-like sales fell 12% in the final quarter, while revenue tumbled by 4% to £2.9bn.

Sales in its important Asia Pacific region were down 17% in its financial fourth quarter, while its number of Chinese customers was down 12% compared to the same period a year earlier.

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Burberry warned that it expects wholesale revenue to drop by about 25% in the first half of this year.

It also said that due to changes in foreign exchange rates, it expects a currency headwind of about £30m to revenue and £20m to profit next year.

Read more: Mag 7 stocks including Apple and Amazon still holding strong

Chief executive Jonathan Akeroyd said that while the financial results underperformed the company's original expectations, it had made good progress refocusing its brand.

Yanmei Tang, analyst at Third Bridge, said: “Burberry is among the brands that have been affected by a slowdown observed across the wider luxury industry. High-end customers become pickier about what they buy.

“Our experts say Burberry is struggling to clearly define and elevate its brand identity, resulting in confusing messaging and poor sales growth. There is too much reliance on a new creative direction rather than making operational changes.”

Tobacco company Imperial Brands reiterated its full-year outlook, despite a fall in interim profits and sales.

Sales of Imperial's NGP brands, which include Pulze heated tobacco and blu e-cigarettes, were up 16.8%. The company also raised its interim dividend by 4% to 44.90 pence.

Reported revenues fell 2.3% in the six months to 31 March, to £15.1bn, while operating profits fell 2.6% to £1.5bn.

The group said tobacco prices had risen by 8.6%, more than offsetting declining volumes.

Next-generation products (NGPs) like vaping and heat-not-burn saw an 16.8% increase in revenue amid strong growth in Europe, Africa and Asia-Pacific. Volumes in the US plunged by 10.3%.

"Pricing actions in tobacco taken in the first half and good momentum in NGP gives us confidence in our ability to deliver full-year results in line with our guidance," CEO Stefan Bomhard said.

Shares in Boeing slipped during pre-market trading amid reports that the company could face prosecution in the US over the 737 MAX plane crashes which killed 346 people.

The US Department of Justice (DOJ) had filed a case accusing the aircraft maker of breaching its obligations in a 2021 agreement that shielded Boeing from criminal prosecution over the crashes.

The crashes - one in Indonesia in 2018, and another in Ethiopia in 2019 – killed a total of 346 people.

US officials said in their letter that Boeing breached its obligations under a deferred prosecution agreement (DFA) by "failing to design, implement, and enforce a compliance and ethics programme to prevent and detect violations of the US fraud laws throughout its operations."

Read more: Stocks to watch this week: Burberry, Vodafone, BT and Walmart

Prosecutors will tell the court no later than 7 July how they plan to proceed, the justice department said.

Boeing has continued to face intense scrutiny over the safety of its aircraft after an unused door came off a new 737 Max shortly after take-off in January, leaving a gaping hole in the side of the plane.

Shares in Oracle were higher ahead of the market opening after news that company is close to a deal for a $10bn cloud contract with Elon Musk’s artificial intelligence startup xAI.

The deal, first reported by The Information, revolves around leasing cloud servers from Oracle, making xAI one of Oracle’s largest clients and a significant contender in the AI landscape alongside OpenAI and Google.

Read more: FTSE 100 LIVE - European stock markets rise to record highs amid hopes for interest rate cuts

Last September, Oracle chairman Larry Ellison announced that the company had secured a deal to provide cloud infrastructure for xAI to train its artificial intelligence models. At that time, Ellison did not disclose the contract’s value or duration.

However, the latest reports indicate that the deal is set to span five years and is valued at $10bn.

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