Why I think this FTSE 100 growth achiever has been hiding in plain sight

I don’t often think of FTSE 100 companies as multi-bagging shares with the potential to multiply investors’ money again in the future. And when I reflect on the retail sector, I tend to pull a strange grimace and my nose puckers up. But my prejudices have been keeping some great opportunities hidden from me in plain sight, and I reckon luxury fashion house Burberry Group (LSE: BRBY) is one of them.

Whichever way I look at it, investors are winning

If you’d bought some of the firm’s shares in the depths of the post-credit-crunch slump back in November 2008 and held them until today, you’d be up around 840%, plus dividends. I have to admit a fair bit of that gain arose because of a cyclical recovery. Indeed, the retail sector is highly cyclical and share prices can plunge and soar because of fluctuating company earnings, or just because the stock market anticipates or frets about volatile earnings.

But even if your market timing had been terrible and you bought Burberry shares at their earlier peak in April 2007, just before the credit crunch, you’d still be sitting on a gain of around 150% on top of the dividends you collected along the way.

Burberry has been growing. I think a good litmus test of any company’s health is to look at the dividend record and, since 2013, the dividend has risen a bit every year. City analysts expect further increases this year and next. Despite all the negative news about retailers struggling, Burberry seems to be trading well.

Flat short-term trading

Today’s third-quarter update reveals constant currency sales for the 13 weeks to 29 December eased back 2% compared to the equivalent period last year, but comparable store sales rose 1%. I see that as a broadly flat performance, and a long way from the financial carnage some other retailers have been reporting.

I think Burberry’s business is holding up so well because of its international footprint. Last year, around 40% of revenue came from the Asia Pacific region, 36% from Europe, the Middle East, India and Africa, and 24% from the Americas. The company owns a great British brand that’s selling abroad – exporting Englishness if you will. In the years and decades to come, I believe the firm’s offering will gain even more traction with a growing foreign affluent class.

Unleashing a new vision

Last May, I reported on the firm’s appointment of Riccardo Tisci to the key position of chief creative officer. He’d previously served more than 10 years as creative director at Givenchy and is now a major part of the first phase of a multi-year plan to “transform and reposition Burberry.” Chief executive Marco Gobbetti said in today’s update the firm is building “brand heat” around its new creative vision and aims to “shift consumer perception of Burberry.” Meanwhile, Tisci’s debut catwalk collection is due to be launched next month, which could usher in a new period growth for the company.

But even if growth is slow to crank up again, I reckon Burberry’s brand is strong. I’d be tempted to pick up a few of the shares, collect the ongoing and growing dividends, and bed in for the long haul to see what happens.