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Burberry has blamed the global luxury slowdown — and especially weak demand in China and the US — for a fall in its full-year revenue and profits. The British brand warned that the challenges are expected to persist in the first half of its 2025 fiscal year.
Burberry’s revenue was down 4 per cent year-on-year on a reported basis to £2.97 billion in the 52 weeks ended 30 March 2024, according to the company’s preliminary results. Sales slumped 12 per cent in the final quarter. Its full-year adjusted operating profit dropped by 34 per cent to £418 billion. Shares were down 2.4 per cent in early trading.
“The global slowdown in luxury demand presents additional challenges that we are adapting to,” CEO Jonathan Akeroyd told investors on a call. “We expect the first half to remain challenging and the benefit of the actions we are taking [to] start coming through from H2. We are confident in our strategy and in our ability to successfully navigate this period.”
The latest round of quarterly earnings show a growing polarisation in the industry: ultra-luxury brands like Hermès and Brunello Cucinelli reported double-digit growth, but much of the rest of the industry — especially those with a higher exposure to middle-class consumers — saw sales fall. Ferragamo’s sales dropped 16.6 per cent in the quarter; Kering’s revenue fell 10 per cent; Zegna Group sales declined 5.3 per cent; Valentino reported a 3 per cent decline; and Tapestry saw sales drop 2 per cent. Many pointed to challenges in China, where consumer confidence has tumbled.
Burberry said sales in Asia Pacific were up 3 per cent overall this year, but declined 17 per cent in Q4 after sales in China plummeted by 19 per cent. “One of the biggest areas of concern for us in Mainland China locally is the malls are very quiet. We’ve seen a significant reduction in traffic in most of the malls that we’re working with, and I don’t think this is exclusive to us,” Akeroyd said. Burberry plans to “aggressively” grow its customer base in China by enhancing its brand image and marketing, he said — leaning into its British heritage, which is a strong draw in China.
The US was down 12 per cent in both Q4 and fiscal year 2024. “It’s a bit broader than the aspirational customer declines that we saw just over 12 months ago now, it seems to be more the luxury sector in general,” said Akeroyd. Nevertheless, the CEO highlighted that Burberry’s core customers have reacted well to the new product offering, and that the US market has a stronger share of accessories sales.
Sales in Europe, the Middle East, India and Africa (EMEIA) grew 4 per cent in 2024, with local spend falling but tourist sales growing. Spending across Central Europe has improved, up 8 per cent in the fourth quarter, led by Paris and Milan, but the UK is lagging behind (declining 17 per cent in the same period). Akeroyd blamed the UK’s underperformance on the removal of the tax-free shopping scheme for tourists, but declined to comment on whether Burberry has received positive engagement from the Labour party on potentially reintroducing the policy if they win the next general election.
The company said it expects China and the US to remain a challenge. It also forecasts that wholesale revenue (which declined 7 per cent in the 2024 fiscal year) will fall by 25 per cent in 2025 as it increases control over distribution.
“Burberry is still in the middle of its brand turnaround but weaker sales than expected are making tougher cost actions necessary,” said Deutsche Bank analysts Adam Cochrane and Shwetha Ramachandran in a note. “There was no explicit sales or profit guidance provided, which likely reflects some of the uncertainty for the year ahead.”
Burberry said its strategic priorities for 2025 are to continue refining the “brand expression” and increase its focus on storytelling through products; deepen its connection with new and existing customers; build out a full product offer with balance between seasonal and core collections; focus on conversion within its retail stores; elevate the online retail experience; reduce wholesale exposure in EMEIA; and cut operational costs to offset the impact of inflation.
Akeroyd highlighted that 50 per cent of Burberry’s stores are either new or refurbished, and said he’s optimistic about creative director Daniel Lee’s new offering, which has been rolled out across Burberry channels. Akeroyd remains confident that Burberry can reach £4 billion in revenue in the next three to five years. “We have an incredible brand — we’ve got a really strong brand equity with an incredible heritage,” he said.
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