LONDON – Burberry warned that it might not meet its full-year revenue growth target for fiscal 2024, and that adjusted operating profit would be at the “lower end” of the consensus range due to the widespread slowdown in luxury demand.
The British brand already began witnessing the impact of that slowdown over the past few months, with demand in Mainland China shrinking, and U.S. demand declining further.
On Thursday, Burberry said that in the first half ended Sept. 30, revenue grew 4 percent at reported rates and 7 percent at constant rates to 1.4 billion pounds.
Growth was fuelled by double-digit gains in Asia-Pacific and the EMEIA region, and strong sales of outerwear, trench coats, and leather bags.
Those figures compare with revenue growth of 17 percent at actual rates and 19 percent at constant rates in Burberry’s first fiscal quarter.
In the first half, adjusted operating profit was down 6 percent to 223 million. At constant exchange, adjusted operating profit grew 1 percent. Reported profit for the period fell 18 percent to 158 million pounds.
Burberry’s chief executive officer Jonathan Akeroyd said that while the company has made “good progress” against its strategic goals, he noted that the macroeconomic environment has become more challenging.
Despite that, he said “we are confident in our strategy to realize our potential as the modern British luxury brand, and we remain committed to achieving our medium and long-term targets.”
The company added that if the weaker demand continues, it is “unlikely” to achieve its previously-stated guidance of low double-digit revenue growth for fiscal 2024, which ends in March.
If growth does slow, adjusted operating profit for year will be towards the “lower end” of the current consensus range of 552 million pounds to 668 million pounds, Burberry added.
For the full year, company added that it expects a reduced currency headwind of 110 million pounds on revenues, and around 60 million pounds on adjusted operating profit.