Burberry shares crater after luxury goods profit warning
British fashion house Burberry has slashed its profit guidance for the year, in response to a slowdown in demand for luxury purchases.
The designer told markets this morning it now expects adjusted operating profit for the financial year ended 30 March 2024 to be in the range of £410m to £460m, down from £552m-£668m.
Shares at the firm took a seven per cent tumble when markets opened this morning, and are down just shy of 10 per cent at lunchtime.
It comes as revenues over the Christmas period slumped by seven per cent to £706m, and store sales in the Americans and EMEIA took a respective hit of five and 15 per cent.
Jonathan Akeroyd, chief executive officer, 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.
He added: “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.”
The trenchcoat maker has previously blamed the UK’s government’s hesitancy to reinstate VAT shopping for international tourists for damaging sales of its expensive garments.
“UK continued to lag Continental Europe in attracting tourism spend compared with pre-pandemic levels, reflecting the withdrawal of VAT refunds in the UK since January 2021,” the brand said back in November.
The government ditched what is now dubbed the ‘tourist tax’ in 2021 when Prime Minister Rishi Sunak was Chancellor.