Shares of Burberry, the British luxury-goods company, plummeted in early trading on Friday following the release of its downgraded guidance. The company cited a continued decline in global luxury demand during the crucial trading period in December.
At 8:17 GMT, Burberry shares were down by 6.1%, or 83.0 pence, at 1,277.5 pence. This contrasts with the FTSE 100 index, which is up by 0.9%. Over the course of the past year, shares have decreased by 43%.
In an unexpected update, Burberry announced that it anticipates its adjusted operating profit for fiscal 2024 to be in the range of £410 million to £460 million ($523.2 million-$587.1 million). This figure excludes exceptional and other one-off items. Previously, the company had expected to achieve the lower end of the market’s estimated range of £552 million to £668 million.
During the thirteen-week period ending on December 30, retail revenue fell from £756 million to £706 million compared to the previous year. On a like-for-like basis, sales declined by 4%. Notably, the U.S. market experienced a significant drop in performance, with comparable store sales decreasing by 15%. In contrast, the Asia and Pacific region saw a 3% increase in sales.
The luxury sector has been grappling with sluggish sales growth due to inflation and high interest rates, which have resulted in reduced consumer spending. In November, Burberry warned that declining demand for luxury goods was negatively impacting its performance and that it was unlikely to meet its guidance if this trend continued.
Burberry’s update was moved forward by one week from its original scheduled release date of January 19th.
The news also affected luxury brand Mulberry, with its shares experiencing a 6% decline. Other European peers, such as LVMH, Kering, and Ferragamo, also saw their share prices fall by 1.4%, 2.1%, and 1.1% respectively.
