Burberry reports quarterly results below expectations, while first-half profit falls significantly. Despite a rise in sales, the British luxury house expresses concern about achieving its forecasts for the 2023-2024 financial year.
Burberry’s ability to meet its forecasts appears to be in jeopardy following the announcement of its quarterly results on Thursday, November 16. The British luxury goods group reported an 18% drop in profit to 158 million pounds (180.5 million euros) in the first half ended September 30, on sales up 4% to 1.4 billion pounds (1.6 billion euros).
Adjusted operating profit fell by 6% to 223 million pounds (254.8 million euros) in the first half, although it rose by 1% at constant exchange rates. Adjusted operating margin fell by almost 2%. Profit before tax fell from 251 million pounds to 219 million pounds (250.3 million euros).
Burberry believes that double-digit growth for fiscal 2024 will be unlikely, warning of a “slowdown in global luxury demand”. The company now expects adjusted operating profit to be at the lower end of the current range of £552 million to £668 million (€631-763 million).
“Although the macroeconomic environment has become more challenging recently, we are confident in our strategy to realize our potential as a modern British luxury brand, and we remain committed to achieving our medium- and long-term objectives,” said Jonathan Akeroyd, Burberry’s chief executive, in a statement.
Uneven regional performance
Burberry’s results reflect an uneven performance worldwide. In Asia-Pacific, sales rose by 18% in the first half, but slowed to 2% in the second quarter. Mainland China grew by 15% in the first half, but fell by 8% in the second quarter. South Korea posted a decline of 1% in the first half and 7% in the second quarter. By contrast, Japan posted exceptional growth of 43% in the first half, mainly thanks to tourists.
In the EMEIA region, same-store sales rose by 14% in the first half, driven by a 39% increase in tourism. However, the UK continued to face challenges in attracting tourist spending, recording a performance below the regional average.
The Americas recorded a 9% decline in the first half and a 10% drop in the second quarter, with notable progress in the customer acquisition program despite an overall weak US customer base.
Licensing revenues soar
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Featured photo : ©Burberry
