Burberry's a great company – but don't buy the shares

Burberry delivered a pleasant surprise to investors by raising its dividend on the back of 'solid' first half results. But despite some promising signals, investors should be wary, says Tim Bennett.

In a year when many companies have been cutting dividends, Burberry (LSE:BRBY) just delivered a pleasant surprise by raising theirs by 4%. That boost comes on the back of first half results that CEO Angela Ahrendts described as "solid". But, despite these promising signals, investors should be wary.

Burberry is one of the best fashion businesses in the market. It knows what sells- snazzy trench coats - and how to innovate successfully- the scarf-cum-hood 'snood', for example. What's more, it was quick off the blocks to cut 1,000 staff and reduce stock levels as the recession bit. Indeed, if I was going to fill my Christmas stockings with any luxury retailer's stocks, this would be the one. But I'm not. Burberry's problem is that it's in the wrong sector.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.