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Burberry full year results hit by slowing luxury demand

May 22, 2024 United Kingdom
Burberry full year results hit by slowing luxury demand
The luxury group has reported a decline in both sales and profits amid a slowdown in demand for luxury goods, which particularly affected its performance in mainland China and the US
Executing our plan against a backdrop of slowing luxury demand has been challenging. While our FY24 financial results underperformed our original expectations, we have made good progress in refocusing our brand image, evolving our product, and strengthening distribution while delivering operational improvements. We are using what we have learned over the past year to finetune our approach while adapting to the external environment”, commented Jonathan Akeroyd, Chief Executive Officer.

Full Year Results

According to the company's preliminary results, Burberry’s revenue in the fiscal year 2023/2024 totalled 2.97 billion British pounds (3.48 billion euros), down by 4% from the previous year. Retail sales of 2.40 billion British pounds were up by 1% at current exchange rates, despite a reported decline of 4%, and wholesale sales of 506 million British pounds were down by 7% on a reported basis and by 5% at current exchange rates.

Full year comparable store sales in the EMEIA region increased by 4% due to “strong tourist growth”, but “some pressure from local consumer spending” led to a decline of 3% in the fourth quarter of the year, on a comparable basis to fiscal 2023/2024.

In the Asia Pacific region, full year sales rose by 3% year-on-year, despite a 17% decline in the last quarter of the year, mainly due to the performance in Mainland China, where sales decreased by 19%. “One of the biggest areas of concern for us in Mainland China locally is the malls are very quiet. We’ve seen a significant reduction in traffic in most of the malls that we’re working with, and I don’t think this is exclusive to us”, added Akeroyd in a call with investors.

In the Americas’ region, on the other hand, full year and fourth quarter comparable store sales dropped by 12%, as compared to the previous fiscal year, thanks to “a relatively broad-based decline in the region across our local customers”.

The group’s adjusted operating profit amounted to 418 million British pounds (489 million euros) in the 52 weeks ending on the 30th of March, a decrease of 30% on a comparable basis to a similar period of last fiscal year. In the end, Burberry’s total profit declined by 45% to 270 million British pounds (316 million euros), as compared to fiscal year 2022/2023.


Outlook

Burberry's strategic priorities for 2025 are to continue to refine its “brand expression” and increase its focus on storytelling and deepen connection with new and existing customers; to build a complete product offer with a balance between seasonal and core collections; to focus on conversion within its retail stores; to improve the online retail experience; to reduce wholesale exposure in EMEIA; and to improve operational delivery and advance the sustainability agenda.

In the meantime, Burberry expects the first half of the current financial year to remain challenging. Wholesale sales are expected to decline by around 25% in the first half as the company tightens control over distribution and based on exchange rates on the 25th of April, the company expects a currency headwind of c.30 million British pounds (35.1 million euros) to revenue and c.20 million British pounds (23.4 million euros) to adjusted operating profit in FY25.


1 GBP = 1.17 EUR

Image Credits: crash.fr

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