British luxury house Burberry has reported a sharp fall in profits for the 2023-2024 financial year. This situation has been exacerbated by sluggish demand for luxury goods. Despite this, the British House remains confident in its strategy of moving upmarket, and hopes for improvements from the second half of the year.
The normalization of luxury has not spared Burberry. The British house of luxury clothing, accessories and fragrances announced this Wednesday a significant drop (-34%) in its annual operating profit for the 2023-2024 financial year. In turn, the fashion brand’s pre-tax profit fell by 40% to £383 million for the year ending March 30, 2024.
“Implementing our “move upmarket” plan against a backdrop of slowing demand for luxury has been challenging,” admits CEO Jonathan Akeroyd.
Same-store sales fell by 12% in the final quarter, wiping out the gains made earlier in the year. Over the full year, overall sales fell by 4% to £2.97 billion (€3.46 billion).
Net profit, Group share, fell by 45% to £270 million (314 million euros). This disappointing performance led to a 4% fall in the share price at the opening of trading in London on Wednesday, and a 19% drop since the start of the year.
Jonathan Akeroyd admitted that the results were below initial expectations, but highlighted the progress made in refocusing the brand.
“We are using what we have learned over the past year to refine our approach, while adapting to the external environment,” he said. The CEO remains confident that Burberry will become the brand of “modern British luxury”.
Regional problems
The luxury fashion house suffered a 12% drop in store sales in US markets, where it continues to see “a relatively widespread decline” in retail customers.
In-store sales in Europe, the Middle East and Africa rose by 4% over the fiscal year, but fell by 3% in the first three months of 2024. This region initially benefited from growth in tourism, but then faced pressure on local consumer spending, which posted a double-digit fall in the fourth quarter.
In addition, strong sales in Asia at the start of the year were offset by a 17% drop in the fourth quarter, due to weakening demand in mainland China.
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Featured photo : © Burberry
