I’m looking for one of the best FTSE 100 restoration shares to purchase for subsequent yr. And Burberry Group (LSE:BRBY) is close to the highest of my listing after its latest share price collapse.

Ought to I purchase it for my portfolio? Right here’s my view.

On the rack

I take Warren Buffett‘s advice to “never invest in a business you cannot understand” extremely seriously. It’s why I’ve by no means beforehand thought-about shopping for Burberry shares for my portfolio.

It may be my age, or as a result of I don’t perceive style. Regardless, I don’t know what makes its merchandise higher or worse than different luxurious manufacturers. I do know it’s well-known for raincoats and its distinctive examine sample, however that’s it.

Nonetheless, the sharp fall in its share price this yr has made me take discover. At 601p per share, Burberry’s price has crumbled by two-thirds in the course of the previous 12 months.

As I say, I’m not the man to speak to for style suggestions. However I do know what an organization in misery seems like. And the pink lights are flashing right here.

Burberry — which is because of lose its prestigious FTSE 100 itemizing subsequent week — reported a 22% gross sales droop in its newest financials protecting April to June.

It’s additionally going through massive prices because it revamps its shops, and has suspended the dividend to ease the strain on its stability sheet.

Troubles run deep

Like different luxurious manufacturers, the agency is struggling as rich clients tighten their wallets in response to the unsure financial surroundings. Even this previously sturdy finish of the retail market has suffered within the present local weather.

Names together with LVMH, Kering and Hugo Boss have additionally reported disappointing gross sales, partly on account of China’s weakening market. However Burberry’s issues appear to run deeper than this.

The corporate seems to be affected by an identification disaster. It switched technique within the late 2010s to focus on the ultra-high-end section of the style market.

But it surely’s already partially falling by the wayside on this concept. Its focus is now on “rebalancing our product offer to include a broader everyday luxury offer and a more complete assortment across key categories,” it has stated.

Burberry has bought by way of 5 completely different chief executives in simply over 10 years. It’s additionally had a number of inventive administrators in that point, though that’s not surprising at such a enterprise. However I believe the CEO scenario reveals an organization with out a clear course, and one which’s in a muddle with its model.

Nonetheless expensive

I’m not counting Burberry out, thoughts. Its newest chief government Joshua Schulman has a powerful observe report at heavyweight manufacturers Michael Kors, Jimmy Choo and Coach. He could possibly be simply the person to show across the agency’s fortunes.

Nonetheless, it’s an excessive amount of of a danger for me, and particularly at present costs.

Even after its share price collapse this yr, Burberry shares nonetheless carry a excessive valuation. Its ahead price-to-earnings (P/E) ratio of 28.1 occasions is greater than double the FTSE 100 index common.

Given the mountain the agency has to climb, I don’t assume opening a place at these ranges can be smart. Such a score might immediate one other price droop if information popping out of the style home spooks buyers once more.

I believe there are significantly better restoration shares out there for me to purchase proper now.