Shares at Burberry have risen by more than 7% after reports suggested rival Moncler may be eyeing up a bid for the British luxury fashion brand.
The spike comes after the trade journal Miss Tweed reported that Moncler, which also owns Stone Island, was looking at a potential acquisition of Burberry, which has struggled as demand for luxury goods has fallen.
It cited several industry sources who said that the head of the luxury goods conglomerate LMVH, 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 15.8% stake in Double R, the investment vehicle that owns Moncler, which gives a seat on the Italian fashion brand’s board.
Moncler told the Guardian it did not comment on “unsubstantiated rumours”.
Shares in Burberry rose as high 872p in early trading on Monday, up more than 7% from the 812p they closed at on on Friday.
The reports came after a number of analysts identified Burberry as a potential takeover target earlier this year after the company’s share price fell by 40% over a 12-month period. This meant it dropped out of the FTSE 100 index for the first time in 15 years.
The drop in the share price and two profit warnings earlier this year led to the abrupt exit of chief executive Jonathan Akeroyd after nearly three years at the helm.
Its profit warning in July followed a double-digit decline in sales across its core markets in what the company described as a “disappointing” first quarter. The company also scrapped its dividend.
Store sales in the Americas and Asia Pacific tumbled by 23%, while sales in Europe, the Middle East, India and Africa dropped by 16%.
after newsletter promotion
The company has also been particularly hit by an economic downturn in China, where cash-strapped shoppers have become more picky about their high-end purchases. In May it reported that sales in China had dropped by 19% for the final quarter of last year.
Burberry is one of several luxury brands that have struggled in recent years as consumer spending tightens. The Gucci owner, Kering, issued a profit warning in March, also citing a decline in Chinese consumer spend as factor in sluggish sales.
The Guardian has contacted Burberry. LVMH declined to comment.