British luxury stock Burberry was already struggling. Trump’s tariffs are now making its recovery even more challenging.
As markets reacted to Liberation Day and the imposition of 10% tariffs on UK goods by the US government, the FTSE 250 company’s stock fell 5.5% in early trading.
Like many retailers, Burberry has significant exposure to the Far East. A slowdown in luxury spending in China had already caused it significant losses.
Today, its exposure to Southeast Asian countries is adding to its pain. Vietnam, Cambodia, and Indonesia have all been hit with reciprocal tariffs between 42% and 49%.
Jelena Sokolova, equity analyst at Morningstar, believes the biggest risk facing the luxury sector is not the tariffs themselves but their impact on consumer sentiment and global economic growth.
The poor performance of the US stock market suggests widespread negativity, which will hit luxury demand.
So is Burberry stock a buy, sell, or hold?
According to Morningstar analysis, Burberry stock is significantly undervalued, and trading in five-star territory.
Year to date, shares in Burberry are down over 24%, trading at 736.20p – below Morningstar’s fair value estimate of £13.30.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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