Profits slide at Burberry as luxury demand slows

15th May 2024 07:01

(Sharecast News) - Burberry Group warned of a challenging first half on Wednesday, after slowing luxury demand dented annual sales and profits.

The luxury fashion brand said revenues in the year to 30 March fell 4% to £2.97bn. On a constant currency basis, revenues were flat, while like-for-like store sales fell 1%.

Burberry said a "robust" first half, where comparable store sales had sparked 10%, had been offset by a more challenging second half, when they fell 8%.

In the fourth quarter, sales in Asia Pacific tumbled 17% - compared to a 3% rise in the third - led by a 19% slump in mainland China. Sales also remained weak throughout the year in the Americas.

Group adjusted operating profits slid 34% to £418m, while earnings per share tumbled 41% to 73.9p.

Jonathan Akeroyd, chief executive, said: "Executing our plan against a backdrop of slowing luxury demand has been challenging.

"While our full-year financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product and strengthening distribution while delivering operational improvements."

However, looking to the current year, the group acknowledged: "In the context of a still uncertain external environment, we expect the first half to remain challenging.

"We expect to see benefit of the actions we are taking from the second half."

In particular, Burberry flagged a likely 25% fall in wholesale revenues in the first half, adding: "We will continue to balance investment in consumer facing areas with disciplined cost control to support our growth ambition.

"We have identified cost savings to enable us to offset the impact of inflation in the second half."

It also warned that currency fluctuations were likely to hit revenues by around £30m and adjusted operating profits by around £20m in the full year.