Updated January 12th, 2024 at 13:50 IST
Burberry issues second profit outlook warning in three months amid global luxury slowdown
Burberry's struggles are reflective of broader challenges faced by competitors, with industry leaders like LVMH and Kering also reporting diminished demand.
Burberry profit outlook: Burberry, the British luxury fashion brand, has delivered another blow to its full-year profit outlook, marking the second warning in three months. The company attributes this downward revision to a continued slowdown in global demand, signaling challenges for CEO Jonathan Akeroyd's turnaround strategy. The luxury brand has been striving to elevate its positioning under the creative direction of designer Daniel Lee, who debuted his inaugural collection in September.
The recent trading period in December witnessed a deceleration in Burberry's key markets, leading to a revised expectation for full-year adjusted operating profit. The new range is between £410 million ($523 million) and £460 million, a significant reduction from the previous estimate in November. Back then, the company had indicated the adjusted operating profit would likely be towards the lower end of analysts' forecasts, ranging from £552 million to £668 million.
Challenges in luxury fashion industry
Burberry's struggles are reflective of broader challenges faced by luxury competitors, with industry leaders like LVMH and Kering also reporting diminished demand for high-end goods in crucial markets such as the United States, Europe, and China. Factors contributing to this trend include the waning post-pandemic shopping spree, geopolitical tensions in the Middle East, and inflation concerns. Shoppers in the US and Europe are tightening spending, while China's anticipated strong rebound is facing headwinds due to a property crisis.
For the 13 weeks ending December 30, Burberry reported a 7 per cent decline in retail revenue, amounting to £706 million. Comparable store sales fell by 4 per cent, with a notable difference across regions. While the Asia Pacific region saw a 3 per cent increase, Europe experienced a 5 per cent decrease, and the Americas recorded a substantial 15 per cent decline. The company's shares have plummeted by 39 per cent over the past year, indicating the magnitude of challenges faced by Burberry in the competitive luxury market.
(With Reuters inputs.)
Published January 12th, 2024 at 13:50 IST