Don’t hold your breath for a Burberry turnaround this year. On May 15, the British luxury company reported that revenue for the fiscal year ended March 30, 2024, fell 4 percent on a reported basis and was flat on a constant currency basis due to slowing luxury demand.
Adjusted operating profit plunged 25 percent at constant exchange rates, reaching £418 million ($529 million), falling on the lower end of a range Burberry announced earlier this year.
“While our FY24 financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product, and strengthening distribution while delivering operational improvements,” stated Burberry CEO Jonathan Akeroyd in a release.
Performance in China in Q4 was particularly dire. Comparable store sales fell 19 percent, while sales from the overall mainland Chinese consumer group were down 12 percent compared to the same period last year.
Although outerwear and scarves performed strongly over the year, both men’s and women’s ready-to-wear declined by a mid-single-digit percentage. This includes creative director Daniel Lee’s first few collections, which started arriving in stores last September.
Entering a new fiscal year, Burberry expects H1 to remain challenging, with wholesale revenue estimated to fall by about 25 percent. The company plans to prioritize classic designs, like the trench coat, in addition to increasing its marketing investment in China and the US to strengthen brand visibility and consumer engagement.
While luxury brands like Burberry and Gucci report lackluster results, others like Prada and Hermès are defying expectations thanks to the resilient demand for ultra-luxury goods. As middle-class and aspirational consumers rein in their spending, courting high-end consumers will be key to weathering the storm.