{"id":85301,"date":"2023-11-16T11:02:34","date_gmt":"2023-11-16T16:02:34","guid":{"rendered":"https:\/\/ifintechworld.com\/uncategorized\/britains-burberry-bruised-by-slowdown-in-luxury-spending\/"},"modified":"2023-11-16T11:02:35","modified_gmt":"2023-11-16T16:02:35","slug":"britains-burberry-bruised-by-slowdown-in-luxury-spending","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=85301","title":{"rendered":"Britain’s Burberry bruised by slowdown in luxury spending"},"content":{"rendered":"
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\u00a9 Reuters. A Burberry store is seen in London, Britain, January 16, 2023. REUTERS\/Peter Nicholls\/File Photo<\/span>
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By Paul Sandle<\/p>\n

LONDON (Reuters) -Burberry will struggle to meet its annual revenue forecast of low double-digit growth after it was hit by a global slowdown in luxury spending, the British brand said on Thursday.<\/p>\n

The company, which launched the first collection by designer Daniel Lee in September, reported a sharp drop in comparable store sales growth from 18% in its first quarter to just 1% in the second, as demand in China evaporated. <\/p>\n

Its shares fell 10% in early trading, and the downbeat tone weighed on the wider sector.<\/p>\n

Rising inflation and economic uncertainty have curbed shoppers’ appetite for luxury after years of blockbuster demand, prompting investors to trim forecasts.<\/p>\n

Burberry said the slowdown was pronounced in September, coinciding with the arrival in stores of Lee’s first runway designs and a new brand identity, the latest step in its strategy to move the label into a higher echelon of luxury.<\/p>\n

Chief Executive Jonathan Akeroyd said the revenue downgrade was “very much geared around the macro”, rather than the response to new products such as the 2,890 pounds ($3,582) medium-sized “Knight” bag.<\/p>\n

He said he was excited about the reception to the designs six weeks in, with a “nice shift” to accessories, both shoes and bags.<\/p>\n

Portfolio manager Angelo Meda at Banor SIM, who cut his exposure to luxury earlier this year following downbeat Chinese data, said Burberry was “certainly not an isolated case”.<\/p>\n

“We haven’t seen anything like this in the luxury space for a long time,” he said.<\/p>\n

LVMH, the world’s biggest luxury group with brands including Louis Vuitton, Dior, and Tiffany, reported a slowdown in quarterly sales in October, as did Kering <\/span><\/span> (EPA:) with its Yves Saint Laurent, Balenciaga and Bottega Veneta brands. <\/p>\n

Cartier-owner Richemont has also predicted slower growth.<\/p>\n

With weaker demand, luxury groups are increasingly targeting the top 5% of shoppers as China’s post-pandemic slowdown dries up the spending power of the once aspirational middle-class.<\/p>\n

Burberry too is trying to move upmarket, increasing price points and product quality, refurbishing stores and spending on marketing, but the strategy is yet to help its numbers.<\/p>\n

Adjusted operating profit fell 6% to 223 million pounds in its first half, it said, and for the full-year it would be towards the lower end of analysts’ forecasts from 552 million to 668 million pounds.<\/p>\n

It said China had retreated in the second quarter after a rebound from the impact of COVID-19 lockdowns. <\/p>\n

Demand in China weakened throughout the quarter, and the extent of the slowdown was clear by September, Chief Financial Officer Kate Ferry told reporters. <\/p>\n

“The exit rates that we saw at the end of Q2 have continued into the (current) quarter,” she said.<\/p>\n

Local demand also shrank in the home market of Britain and in the Americas comparable store sales dropped 10%. <\/p>\n

Burberry said spending by Chinese luxury consumers had shifted overseas, with tourist growth helping European destinations. <\/p>\n

Akeroyd said he was confident Burberry could realise its potential as the modern British luxury brand, and it remained committed to achieving its medium and long-term targets.<\/p>\n

It reported revenue of 1.4 billion pounds ($1.74 billion) for the six months end-September, up 7% at constant exchange rates.<\/p>\n

($1 = 0.8066 pounds)<\/p>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u00a9 Reuters. A Burberry store is seen in London, Britain, January 16, 2023. REUTERS\/Peter Nicholls\/File Photo By Paul Sandle LONDON (Reuters) -Burberry will struggle to meet its annual revenue forecast of low double-digit growth after it was hit by a global slowdown in luxury spending, the British brand said on Thursday. The company, which launched […]<\/p>\n","protected":false},"author":1,"featured_media":5772,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[1],"tags":[83],"class_list":["post-85301","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-uncategorized","tag-featured","post_format-post-format-video"],"yoast_head":"\nBritain's Burberry bruised by slowdown in luxury spending | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u00a9 Reuters. A Burberry store is seen in London, Britain, January 16, 2023. 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