Burberry shares rise after reports Moncler is considering bidding | Burberry group

Shares in Burberry rose 6% after reports suggested Italian rival Moncler may be considering a bid for the British luxury fashion brand.

The spike came after trade magazine Miss Tweed reported that Moncler, which also owns Stone Island, was eyeing a potential takeover of Burberry, which has struggled as demand for luxury goods has fallen.

The magazine cited several industry sources as saying the head of luxury goods conglomerate LVMH, an investor in Moncler, was keen to get a deal done with the British retailer.

LVMH, whose portfolio of high-end brands includes Louis Vuitton, Dior, Fendi and Celine, has a 10% stake in Double R, the investment company that owns Moncler. This gives LVMH a seat on the Italian fashion brand’s board of directors.

Moncler told the Guardian it did not comment on “unfounded rumours”.

Shares in Burberry rose as high as 872p in early trade on Monday, up more than 7% on Friday’s close of 812p. The stock closed up 6% at 861p, valuing it at £3.1bn.

A number of analysts identified Burberry as a potential takeover target earlier this year after the company’s share price fell 40% over a 12-month period. This meant it dropped out of the FTSE 100 index for the first time in 15 years.

The fall in the share price and two profit warnings this year led to Jonathan Akeroyd’s abrupt exit in July after almost three years as chief executive.

Its profit warning in July followed a double-digit drop in sales across its core markets in what the company described as a “disappointing” first quarter. The company also scrapped the dividend.

Store sales in the Americas and Asia Pacific fell 23%, while sales in Europe, the Middle East, India and Africa fell 16%.

The company has also been particularly affected by an economic downturn in China, where consumers have become more selective about their high-end purchases. In May, Burberry reported that sales in China had fallen by 19% in the last quarter of last year.

Burberry is one of several luxury brands that have struggled in recent years as consumer spending tightens. Gucci owner Kering issued a profit warning in March and also cited a drop in Chinese consumption as a factor in sluggish sales.

Burberry and LVMH declined to comment.