Burberry cuts guidance, profits to fall by at least 27%

British high-end fashion group Burberry has delivered a significant profit warning on the back of the well-cited slowdown in luxury demand, which has rocked the industry over recent months.

The company now expects adjusted operating profit for the financial year to 30 March 2024 to be between £410m and £460m, after saying just two months ago at its interim results that profits would be towards the low end of the consensus range at the time of £552m to £668m.

Even if Burberry achieves the top end of its new guidance range, that would represent a 27% drop on the £634m adjusted operating profit registered the year before.

Retail revenues were down 7% in the third quarter ended 31 December at £706m, with comparable store sales falling by 4%.

Comparable store sales in Asia Pacific improved by 3% on last year, but fell by 5% in Europe, the Middle East, India and Africa and dropped 15% in the Americas regions.

Meanwhile, foreign exchange is now forecast to have a slightly bigger impact on the top line for the full year, impacting revenues by £120m (up from the £110m guidance in November) while the £60m impact on adjusted operating profit remains unchanged.

In a brief trading update, the company said: "The slowdown in luxury demand is having an impact on current trading."

However, it added: "We remain confident in our strategy to realise Burberry's potential as the modern British luxury brand, and we are committed to achieving our £4bn revenue ambition."