Burberry (BRBY) has had a terrible start to 2024, although 2023 was hardly a vintage year for the British fashion house either.
The company slashed its profit guidance due to a slowdown in demand for luxury purchases – its second profit warning in three months.
Burberry now expects adjusted operating profit for the year ending 30 March 2024 to be in the range of £410 million to £460 million, down from £553 million to £668 million.
The shares have lost 46% over the past year, and fell further on 15 January when US bank Goldman Sachs downgraded the stock saying greater investment was required to deliver a sales turnaround.
Cracks have clearly begun to appear in the luxury goods sector, with well-heeled consumers around the world coming under pressure from the rising cost of living, affecting even the biggest names in the business such as French champagne-to-perfume conglomerate LVMH (MC:EPA).
Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, commented: ‘Chinese consumers are vital for the luxury sector, but spending from this cohort appears to be slowing. China’s economy is struggling, with its real estate sector in a fine mess, and this appears to be filtering through to Chinese consumer sentiment.’
‹ Previous2024-01-18Next ›