Burberry slashes profit targets as luxury demand weakens further

Burberry has said the slowdown in demand for its luxury goods worsened in December as wealthy shoppers tightened their belts.

As a result, the London-based fashion brand cut its profit projection for the year. The “slowdown in luxury demand” that has persisted following increases in the cost of living and worldwide interest rate hikes, according to the statement, has impacted trading.

Burberry’s CEO Jonathan Akeroyd stated that the company had a “further deceleration in our key December trading period,” which will have an impact on its bottom line. After announcing in November 2023 that pressure from the premium market was causing sales growth to fall short of objectives, Burberry’s shares had already begun to decline.

Retail sales at Burberry for the three months ended 30th December fell by 7 per cent to £ 706 million. It stated that throughout the important selling period, like-for-like store sales decreased by 4 per cent. The company profited from a recovery in Asia led by China and Japan, while its sales in the Americas fell 15 per cent.

As a result, Burberry informed shareholders that it now projects an operational profit for the year ending in March of between £ 410 million and £ 460 million. Additionally, it issued a warning, estimating that negative foreign exchange rates would reduce its earnings by about £ 60 million and revenues by about £ 120 million.

Akeroyd said, “We are continuing to deliver the transition to our new modern British luxury creative expression for Burberry which started appearing in our stores in early autumn. We are still in the early stages of executing this, which has become more challenging against the backdrop of slowing luxury demand. We remain confident in our strategy to realise Burberry’s potential and we are committed to achieving our £ 4 billion revenue ambition.”