British fashion house Burberry reported a decline in operating profit for the full year as the brand continues to be bruised by consumers reducing spending on luxury items.
This morning, the trench coat and plaid scarf maker said profit reduced by 36 per cent to £418m in its last financial year, ending in March 2024. Revenue was also down by four per cent to £2.9bn.
One analyst said the results leaved a “lot to be desired.”
Back in January, the designer brand slashed its profit guidance for the year in a response to shoppers spending less.
Sales in Asia grew by just three per cent over the course of the year, hindered by a 17 per cent drop in the fourth quarter.
And Americas-spending fell a full 12 per cent across the year.
A number of high end designers have been hit hard by shoppers holding back in the region following strict Covid-19 restrictions.
Looking ahead, the board of Burberry still expects trading to be tough.
Wholesale revenue is estimated to fall by around -25 per cent in the first half as it increases control of distribution.
They said: “We will continue to balance investment in consumer facing areas with disciplined cost control to support our growth ambition. We have identified cost savings to enable us to offset the impact of inflation in the second half.
“Based on foreign exchange rates effective as of 25 April 2024, we now expect a currency headwind of c.£30m to revenue and c.£20m to adjusted operating profit in FY25.”
“Burberry’s latest figures leave a lot to be desired, amid slowing demand for luxury,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
“Slowing trends are being seen across the board in the sector, so these weaker results aren’t a total bolt from the blue. The question now will be how quickly demand picks up, and that of course is in the hands of the economy. The relative lack of brand diversification, compared to other names, makes Burberry more exposed to these cycles too. There’s also uncertainty heading into the new financial year, with cost savings being deployed to prop up the bottom line, which isn’t something that can go on forever,” she continued.
Jonathan Akeroyd, chief executive officer of Burberry added: “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 refocusing our brand image, evolving our product and strengthening distribution while delivering operational improvements.”
Burberry’s shares have more than halved in the past year, leaving the stock price back near the lows plumbed during the early stages of the pandemic.