An ill wind is blowing over Burberry. Sales of the British brand, known for its trench coats, fell by 1% for its 2023-2024 financial year ended March 30, revealed Jonathan Akeroyd, its general manager, on Wednesday May 15. Its activity has weakened significantly: over the first three months of 2024, sales fell by 12% at comparable scope and exchange rates. The operating profit of the manufacturer, whose turnover reached 3.4 billion euros, therefore deteriorated by 34%, to 490 million euros.
Financial analysts were not surprised by the delicate situation of the brand, which had warned them by publishing two profit warnings, in November 2023 and January 2024. However, Burberry shares plunged by another 3.6%. Wednesday May 15, degrading its market valuation by 55% in one year on the London Stock Exchange.
Obviously, Mr. Akeroyd is struggling to reassure The City. “Implementing our plan while the luxury market is slowing has been complex”, explained Mr. Akeroyd during a press conference. And, the first half of its 2024-2025 financial year will be just as ” difficult “according to this former Versace executive, appointed head of the luxury brand in April 2022.
“In China, shopping centers are very quiet. Attendance slows down », he specified, putting the fall in sales in the country at 19% during the first quarter of 2024. And in the United States, Burberry no longer appeals to so-called “aspirational” customers, that is to say young consumers who are fond of the brand’s tartan pattern: its American sales fell by 12% over twelve months. Across the Channel, the brand is also suffering from Brexit. Since 2021, tourists no longer benefit from a tax refund on purchases made in stores. “Spending by Chinese tourists in London is half what it was before the pandemic, while it has tripled in Paris”, figures the CEO. Like other luxury manufacturers, Burberry is urging the British government to reinstate a tax-free shopping mechanism. In vain.
“British” heritage
So how will Mr. Akeroyd manage to raise the brand to more than 4 billion pounds sterling (4.65 billion euros) in turnover in the medium term? The objective was set at the end of 2022. Burberry then called on a new artistic director: the British Daniel Lee succeeds the Italian Riccardo Tisci. The man who managed to revive sales of leather goods manufacturer Bottega Venetta, an Italian subsidiary of Kering, is responsible for modernizing the official supplier of trench coats to the British royal family. It will be from the top.
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