Fashion giant Burberry slashes profit targets as luxury demand weakens further

Jonathan Akeroyd, chief executive officer of the firm, said it saw a “further deceleration in our key December trading period” which will weigh on its profitability.

Burberry had already seen its shares slump following its previous update in November, when it warned sales growth was lagging behind targets due to pressure in the luxury market.

On Friday, Burberry revealed retail revenues for the three months to December 30 slid by 7 per cent to £706m.

It said like-for-like store sales dropped by 4 per cent over the key trading period.

The firm benefited from a rebound in Asia, driven by China and Japan, but saw sales tumble 15 per cent in its Americas market.

Burberry told shareholders it now expects an operating profit of between £410m and £460m for the year to March, as a result.

It also warned that it expects unfavourable currency exchange rates to knock its revenues by £120m and profits by around £60m.

Mr Akeroyd said: "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.

"We are still in the early stages of executing on this, which has become more challenging against the backdrop of slowing luxury demand. We experienced a further deceleration in our key December trading period and we now expect our full year results to be below our previous guidance.

"We remain confident in our strategy to realise Burberry's potential and we are committed to achieving our £4bn revenue ambition."

Burberry will issue its preliminary results for the 52 weeks ending March 30 on May 15 2024. The company, which was founded in 1856, is listed on the London Stock Exchange as a constituent of the FTSE 100 index.

Richard Hunter, Head of Markets at interactive investor, said the “premier index” had opened with a sprightly step, adding 0.8 per cent, although also unable to arrest the harm of the last few trading sessions, leaving the FTSE 100 trailing by 1.2 per cent in January.

He added: “The index was held back by a trading update from Burberry which was released early, and which was accompanied by a lowering of the group’s guidance. The shares fell by some 9 per cent in early trade.

M Hunter added: “Some solace was found in the house builders following recent releases implying that demand may be beginning to return, with Barratt Developments and Taylor Wimpey moving higher. “There was also an uptick in certain selected miners, suggesting that some traders could be taking the opportunity to buy on the dip with a potential uptick in global demand later in the year in mind.”