Sales, Profits Fall In Hard Times for Luxury

LONDON – Ongoing, lackluster demand for luxury goods in markets including China and the U.S. dented Burberry’s full year growth in fiscal 2024, with revenue down 4 percent to 2.97 billion pounds, and adjusted operating profit falling 34 percent to 418 million pounds.

At constant exchange revenue was flat, with adjusted operating profit down 25 percent. At 418 million pounds, operating profit was at the lower end of a previously downgraded range announced by Burberry earlier this year.

The fourth quarter ended March 30 was brutal, with comparable store sales in Mainland China falling 19 percent. Sales from the overall Mainland Chinese consumer group were down 12 percent in the fourth quarter compared with last year. 

In the Americas region, comparable store sales fell 12 percent in the year and in the fourth quarter. Burberry said it is continuing to see a “relatively broad-based decline” across its local customer base. 

The EMEIA region, which includes Europe, saw strong tourist growth, with comparable store sales up 4 percent in the full year despite a 3 percent decline in the fourth quarter.

Jonathan Akeroyd, Burberry’s chief executive officer, said that executing Burberry’s strategies against a backdrop of slowing 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,” said Akeroyd. 

“We are using what we have learned over the past year to fine-tune our approach, while adapting to the external environment. We remain confident in our strategy to realize Burberry’s potential,” and in its ability to navigate the period, he said.

Burberry emphasized that the first half will remain “challenging,” and that it expects to see the benefit of its strategies coming through in the second half. Wholesale revenue is estimated to fall by around 25 percent in the first half, as the company increases control over distribution. 

The British brand added that it will continue to balance investment in consumer facing areas with “disciplined cost control” to support its growth ambitions. It is expecting a currency headwind of around 30 million pounds to revenue, and 20 million pounds to adjusted operating profit in fiscal 2025.

Akeroyd is not alone in managing the markets’ expectations. Earlier this year, the company warned that, given the dark climate for luxury, adjusted operating profit would fall between 410 million pounds and 460 million pounds.

Burberry had already said last year that operating profit would suffer from the slowdown in demand. The company was already feeling the full weight of the worldwide luxury slowdown in its fiscal third quarter ended Dec. 30, which had prompted the profit warning. 

Last month, fellow fashion player Kering said it expected operating profit in the first half to plummet by 40 to 45 percent amid a drop in sales at its star brand Gucci, which is undergoing a revamp under CEO Jean-François Palus and creative director Sabato De Sarno.