Burberry Lowers Guidance Amidst Slowing Luxury Demand

By Michael Susin

Burberry, the renowned British luxury-goods company, has announced a revision to its guidance after experiencing a continued decline in global luxury demand during the crucial trading period in December.

The company now expects its fiscal 2024 adjusted operating profit to be in the range of £410 million to £460 million ($523.2 million-$587.1 million), excluding exceptional and one-off items. This is a significant decrease compared to their previous projection of achieving the lower end of the market’s expected range of £552 million to £668 million.

Chief Executive Jonathan Akeroyd expressed confidence in Burberry’s strategy to unleash its full potential and reiterated their commitment to achieving their ambitious goal of generating £4 billion in revenue.

The luxury sector as a whole has been negatively impacted by a slowdown in sales growth, with consumers reining in spending due to inflation and high interest rates. In November, Burberry issued a warning about the adverse effect of diminishing luxury demand on their performance and stated that meeting their guidance would be unlikely if the trend persisted.

During the 13-week period ending on December 30, which is commonly referred to as the “golden quarter” in the industry due to its inclusion of the pivotal Christmas period, Burberry’s retail revenue fell from £756 million to £706 million. On a like-for-like basis, sales experienced a 4% decline.

Additionally, Burberry anticipates a currency headwind of approximately £120 million on revenue and about £60 million in adjusted operating profit.

The company’s revised guidance announcement was brought forward by a week and was originally scheduled for January 19.