Global Luxury Slump Threatens Burberry’s 2024 Projections

Burberry CEO Marco Gobbetti has stated that the company is facing challenges from all over the world, making the current situation unique. Historically, areas of softness could be offset by gains in other regions. However, with inflation, slowing economic growth, and geopolitical challenges occurring everywhere, this is no longer the case.

In Europe, the return of tourists has driven sales, while local customers have been softer due to inflationary and cost of living issues. Meanwhile, in Asia Pacific, comparable store sales grew 18% in the first half but only 2% in the second quarter. Mainland China saw a 15% increase in the half but a decline of 8% in Q2 as spending shifted offshore. Japan and South Asia Pacific saw significant growth in the half, while South Korea fell 1% and US customer demand declined by 9%.

Burberry’s CFO Kate Ferry added that initial indicators for demand on the Autumn/Winter 2023 collection by creative director Daniel Lee were “very encouraging,” with strong engagement on social channels and global press more than doubling season-on-season. However, it is still too early to fully assess the commercial performance. The scrapping of tax-free shopping in the UK remains a challenge for Burberry’s business globally.

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