British luxury brand Burberry faces a tough road ahead as it revises its expectations amidst slow luxury demand. With the uncertainty of the company’s initial forecast of achieving low double-digit revenue growth, the new adjusted operating profit will likely land towards the lower end of the current consensus range of £ 552 million to £ 668 million.
Kate Ferry, Burberry’s Chief Financial Officer (CFO), said that the brand has been experiencing a notable slowdown in Mainland China, with the slowdown extending in its current quarter. Ferry also shared that the demand among American and Asian tourists shopping abroad remains robust. Furthermore, the sales in the European continent outperformed the regional average, while the UK underperformed.
“While the macroeconomic environment has become more challenging recently, we are confident in our strategy to realise our potential as the modern British luxury brand, and we remain committed to achieving our medium and long-term targets,” stated Jonathan Akeroyd, Burberry’s chief executive officer in a release.
Burberry’s revenue in the first half of the fiscal year ending 30th September rose by 4 per cent and reached £ 1.4 billion, marking a 7 per cent increase at constant rates. Notably, the company experienced double-digit growth in the Asia-Pacific and EMEIA regions, propelled by strong sales in outerwear, trench coats, and leather bags.
During the first half, the company witnessed a 6 per cent decline in adjusted operating profit, reaching £ 223 million, but grew at a constant exchange rate of 1 per cent. The reported profit for the same period dropped by 18 per cent to £ 158 million.
Moreover, the brand projected a reduced currency headwind of approximately £ 110 million in revenues and around £ 60 million in adjusted operating profit for the year.
