London-based Burberry Group plc (GB:BRBY) lowered its profit outlook for the full year ending March 30, 2024, amid falling demand for luxury goods. In its Q3 trading update, Burberry said that it now expects FY 24 adjusted operating profit between £410 million and £460 million, significantly below its prior guidance of meeting the lower end of the range of £552 million to £668 million. BRBY shares plunged 11.5% in early morning trade and hit a new 52-week low of 1,162.50p on the guidance cut.
Burberry is a British luxury fashion brand offering apparel, footwear, and accessories in markets across the globe. China remains one of the most important markets for Burberry. BRBY shares have lost 37.5% in the past year.
Burberry’s Q3 Performance
For the 13 weeks ending December 30, 2023, Burberry’s retail revenue slumped 7% compared to the prior-year period. At the same time, comparable sales dropped 4%. Asia Pacific (including Mainland China) was the only positive contributor with comparable store sales growth of 3%, while the top line for EMEIA (Europe, the Middle East, India, and Africa) and Americas fell by 5% and 15%, respectively.
Commenting on the performance, Burberry CEO Jonathan Akeroyd said that the company is on track to transition to a new modern British luxury brand. While there is time to achieve this, several macroeconomic challenges are impacting the company.
Customers are delaying and sometimes even completely halting purchases of luxury goods as inflation eats away at their income. Burberry “experienced a further deceleration in our key December trading period,” Akeroyd added. This led to a downward revision in profit guidance. Having said that, the CEO is positive about achieving £4 billion in revenue in the future. Burberry is set to release its preliminary full-year Fiscal 2024 results on May 15, 2024.
Is Burberry Good to Invest In?
On TipRanks, BRBY stock has a Hold consensus rating based on one Buy, 11 Holds, and one Sell rating. The Burberry Group plc share price target of 1,765.23p implies 47.7% upside potential from current levels.
