By Michael Susin
Burberry shares tumbled in early trading on the FTSE 100 after the luxury brand warned that a global slowdown in luxury demand is impacting its performance. The company stated that if this trend continues, it is unlikely to achieve its guidance.
At 0827 GMT, Burberry shares were down 9.7% or 170.0 pence, reaching 1,575.0 pence.
The British luxury-goods company reported a significant decline in second-quarter sales growth, which plummeted to 1% compared to 18% in the first quarter. Sales in Mainland China, an important region for the luxury sector, dropped by 8%, while sales in the Americas fell by 10%.
Recent inflation and high interest rates have hampered sales growth in the luxury sector, putting pressure on consumer spending.
Considering the persistent weakness in demand, Burberry now casts doubt on achieving its previous guidance of low double-digit revenue growth in fiscal 2024. However, the company maintains its medium-term target of £4 billion ($4.97 billion) in annual revenue.
“Although the macroeconomic environment has become increasingly challenging, we have full confidence in our strategy to establish ourselves as the modern British luxury brand. We remain dedicated to accomplishing our medium and long-term goals,” stated Chief Executive Jonathan Akeroyd.