UBS sees limited read-through from Hugo Boss to Burberry

UBS´s upbeat view on luxury-goods maker Burberry was unmarred by a profit-warning from rival Hugo Boss in the previous session.

The iconic British brand´s pricing was not as stretched and it was better-positioned in the US market, the Swiss broker said.

At the start of the second half of 2015, Hugo Boss´s prices on mainland China were at a level of 200 versus those for its goods in France at 100, analyst Helen Brand said citing evidence from the UBS Evidence Lab, and was now at 165 and attempting to move towards a price differential of 150.

Burberry on the other hand was already at a 150 premium to France which was already more or less in line with the rest of its sector at 148.

"Whilst we continue to see pricing power as limited for the [luxury] space given these stretched regional gaps we do not see Burberry following as dramatic route as Boss," Brand said.

Furthermore, the FTSE 100-listed firm´s brand positioning was more luxury than Boss´s, UBS added.

That was true both in China and in the States.

Boss´s profit warning was also linked to its attempts to move upscale in the US wholesale market against a promotional pricing environment.

Lastly, UBS also thought it detected an opportunity for Burberyy in the handbag space given the 15% price discount versus peers and in its view share buybacks remained an option.

Bran stuck to her 1,500p target price and 'buy' recommendation on the shares.