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Burberry profits fall by more than a third in 2023

The London-based luxury house had an especially challenging fourth quarter with overall revenue for the year falling 4%.

Burberry profits fall by more than a third in 2023

Agyness Deyn walks the runway at the Burberry show during London Fashion Week on February 19, 2024. The company's profits fell 34% in 2023. Joe Maher via Getty Images

Dive Brief:

  • Burberry Group preliminary revenue for fiscal 2023 dropped 4% to 2.97 billion pounds, or approximately $3.76 billion at the time of publication, according to a Wednesday earnings release. Adjusted operating profit fell 34% to 418 million pounds for the year.
  • Fiscal 2023 comparable store sales were down 1% overall, and down 12% in the Americas. In the Asia Pacific region, comparable store sales were up 3%, with China in particular up 2%, South Korea down 8%, South Asia Pacific up 4%, and Japan increasing 25%. EMEIA comparable store sales rose 4% in 2023.
  • In Q4, comparable store sales took a significant hit, falling 12% overall. The Asia Pacific region was impacted the most, with a 17% drop for the period. The Americas were down 12% and EMEIA dipped 3%.

Dive Insight:

The company’s decline was in line with an early profit warning it issued in January, which projected an adjusted operating profit in the range of approximately 410 million pounds to 460 million pounds. However, shares of the London-based luxury house were down more than 5% by publication time as profits fell near the bottom of previous estimates.

The earnings reflected not only the company’s struggles but also larger challenges in the luxury fashion sector. Competitors including Aeffe, Ferragamo and Kering have all seen recent downturns, while companies such as Prada and Zegna have posted revenue upticks. The disparity reflects how uneven sales in the sector have become.

“Executing our plan against a backdrop of slowing luxury demand has been challenging,” CEO Jonathan Akeroyd said in the release. “While our FY24 financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product and strengthening distribution while delivering operational improvements. We are using what we have learned over the past year to finetune our approach, while adapting to the external environment. We remain confident in our strategy to realise Burberry’s potential as the Modern British Luxury brand and in our ability to successfully navigate this period.”

By category, women’s ready-to-wear declined 1% for the year, while men’s ready-to-wear fell 3% and accessories fell 6%. The “children’s & other” category fell 19%. The first collection from Creative Director Daniel Lee, hired in 2022, hit stores in September 2023.

The company added or refurbished 79 stores in 2023, “taking over 50% of the network now upgraded to the refurbished concept,” per the release. Meanwhile, the company reported a wholesale revenue decline of 7% and a licensing revenue increase of 23%.

Last year, the company made several executive changes, including bringing on a new CFO in March 2023 and hiring a new chief supply chain and industrial officer the following month. Prior to that, Burberry also named a chief digital, customer and innovation officer and a chief merchandising officer in January 2023.

Looking ahead, the company said in the release that it anticipates further challenges for the first half of 2024, but expects “to see the benefit of the actions we are taking” beginning in H2. 

“Wholesale revenue is estimated to fall by around -25% in the first half as we increase control of distribution,” the company stated. “We will continue to balance investment in consumer facing areas with disciplined cost control to support our growth ambition.”

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