Burberry in deal to launch sales in Saudi

 
Elizabeth Fournier
LUXURY UK brand Burberry has agreed a joint venture with Saudi-based retailer Fawaz Abdulaziz Alhokair to market and sell its products.

Alhokair will hold a 40 per cent stake in the new company, though the value of the deal was not disclosed yesterday.

Shareholders reacted well to the news, with Burberry one of the best performers on the FTSE 100 yesterday. Shares in the group finished at 1,147p – 2.8 per cent up from the previous day’s close.

The shares had suffered in recent weeks due to concern over the brand’s exposure to earthquake-hit Japan, falling six per cent in the week immediately following the disaster.

But yesterday they were given a further boost due to a note from Exane BNP Paribas, which added the company to its “buy” list due to its potential as a takeover target, citing the LMVH purchase of Bulgari as a possible trend.

According to the note: “Following the recent corporate activity within the space, and the increasing amount of cash in the industry, we would expect such rumours to continue to act as a downside support to the share price.”

Fawaz Abdulaziz Alhokair was formed in 1989 with just two menswear stores, as a partnership between Fawaz, Salman, and Abdulmajeed Alhokair, and has brought brands such as Miss Selfridge, Nine West and Marks & Spencer to the Kingdom.

Burberry yesterday also completed its purchase of leases on two landmark Regent Street buildings, as part of its push to open a series of “statement stores” to play on its role as an English heritage brand.