Burberry, the renowned luxury brand, recently shared a trading update marked by challenges, including a significant profit warning. The report highlighted the complexities the brand is currently navigating.
In the 13 weeks ending December 30, retail revenue witnessed a decline from £756 million to £706 million, translating to a 7% drop. However, at constant exchange rates (CER), the decrease was a more modest 2%. Comparable store sales experienced a 4% dip, but the addition of new retail space contributed positively with a 2% increase.
The standout issue during this quarter was the Americas, where comparable store sales saw a substantial 15% decline. EMEIA faced challenges with a smaller 5% decline, while Asia Pacific showcased positive growth with a 3% increase.
CEO Jonathan Akeroyd, while expressing optimism, acknowledged the withdrawal of the firm’s profit guidance. He mentioned, «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.» Akeroyd recognized the challenges posed by slowing luxury demand, compounded by a further deceleration in the key December trading period.
The adjusted operating profit forecast for the financial year ending March 30 now ranges from £410 million to £460 million, reflecting a significant adjustment from the previous guidance. Exchange rates will continue to pose challenges, with a currency headwind of around £120 million impacting revenue and approximately £60 million affecting adjusted operating profit.
This revised forecast follows the company’s mention in November that annual adjusted operating profit could be at the «lower end» of the consensus range of £552 million to £668 million. The current outlook falls below that range, underscoring the complexities Burberry is addressing in the evolving luxury market.
