The British fashion group Burberry Group Plc is also feeling the effects of the increasing weak demand in the global luxury goods business. On Thursday, the company admitted that it is unlikely to achieve its sales target for the current 2023/24 financial year.
At the same time, the fashion house published its results for the first half of the year. In the 26 weeks before September 30th, group sales amounted to almost 1.40 billion British pounds (1.59 billion euros). This exceeded the level of the same period last year by four percent. Adjusted for exchange rate changes, revenue increased by seven percent.
Strong growth in Asia and Europe is boosting retail revenues
The group owed its growth to its own retail sector, whose sales increased by six percent (currency-adjusted +10 percent) to 1.12 billion British pounds in the first half of the year. On a like-for-like and currency-adjusted basis, retail revenues rose 18 percent in Asia and 14 percent in the EMEIA region, which includes Europe, the Middle East, India and Africa. In America, however, they fell by nine percent.
However, the momentum has recently weakened considerably. While retail sales grew by 18 percent on a comparable basis in the first quarter, the rate of increase in the second quarter was only one percent.
In the wholesale business, half-year sales fell by eight percent (-8 percent adjusted for currency effects) to 241 million British pounds. License income increased by 45 percent (currency-adjusted +44 percent) to 31 million British pounds.
Management warns of declining demand in the luxury goods segment
Due to higher operating expenses and negative currency effects, operating profit fell by 15 percent to 223 million British pounds in the first half of the year. In the same period last year, however, the company benefited from positive one-time factors. Adjusted for special effects, the operating result only fell by six percent. Reported net profit attributable to shareholders fell by 18 percent to 158 million pounds (181 million euros).
Management was pessimistic for the coming months. The declining demand in the global luxury goods segment is currently weighing on the results, the group explained and warned of corresponding consequences: “If the weak demand continues, it is unlikely that we will achieve our sales forecast for the full year 2023/24,” it said in one Notice. The operating profit adjusted for special effects would then be “in the lower end” of the current forecast range of 552 to 668 million British pounds.