Burberry lowered its profit forecast after sales in the key month of December fell.
Adjusted operating profit should be £410 million (€477 million) to £460 million in the year through March, the UK trench coat maker said Friday in an unscheduled trading update. Burberry previously forecast earnings of £552 million to £668 million.
In November Burberry warned this year’s revenue target may be out of reach as the UK trench coat maker’s sales were barely growing. This meant it profit would probably come in at the lower end of its guided range. On Friday it showed that trading was even more difficult than expected.
Chief Executive Officer Jonathan Akeroyd‘s efforts to jump-start the brand have been stymied amid weak demand for luxury goods. Akeroyd has appointed designer Daniel Lee to reinvigorate the company’s popularity, but the efforts have yet to bear fruit.
Consumers have had a muted reaction to Lee’s creations, UBS analyst Zuzanna Pusz wrote in a note in early October, adding there’s a lack of hype on social media for the brand.
In the past few quarters, shoppers worldwide have been balking at higher prices from luxury brands, signalling that inflation is also hitting well-heeled shoppers, especially so-called aspirational customers who tend to buy items at the lowest price levels. – Bloomberg
