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Burberry has warned that trading will remain “challenging” after slowing demand for luxury goods hit its full-year profits.
The group best known for its trenchcoats said pre-tax profits in the year to the end of March tumbled to £383mn from £634mn a year earlier. Revenues dropped 4 per cent to £2.9bn.
Chief executive Jonathan Akeroyd, who has been in the job for two years, acknowledged that the group had underperformed its expectations but insisted progress had been made “refocusing its brand”.
Burberry remains confident in putting “Britishness” at the heart of the brand and trying to take it more upmarket, he added.
However, it is trying to do so in the face of a much tougher luxury market as the industry’s post-pandemic boom ends. The group warned in January that its profits would miss expectations.
Luca Solca, an analyst at Bernstein, said Burberry was “finding it tough to execute its brand development plan against a backdrop of moderating consumer demand”.
Its latest results underlined that Asian and US markets remained grim for the group. Overall like-for-like sales in the fourth quarter dropped 12 per cent year on year.
Shares in Burberry were down 1.5 per cent in early trading on Wednesday.
Akeroyd is targeting sales of £5bn in the long term by selling more higher-margin leather goods, shoes and accessories.
The retailer said on Wednesday that it expected currency headwinds to hit revenues by £30mn this year and adjusted operating profit by £20mn. Despite this, it proposed a full-year dividend of 61p.
Burberry’s struggles echo that of Gucci owner Kering, which warned on profits last month and is trying to overhaul its flagship brand during a downturn in luxury spending.
