Burberry penalized by declining demand in China and the USA

The British brand Burberry has just announced rather negative figures for its 2023/2024 financial year. Global revenue shows a 4% decline, reaching £2.97 billion in sales, while net profit stands at £270 million, marking a dramatic 45% drop compared to the previous year. The cause lies in the delicate situation experienced by the luxury sector in this economic climate: weakened demand and increasingly cautious consumers.

At the same time, Burberry is going through a particular period. For several fiscal years, the British brand has been focusing on reorganizing its production and distribution chain, multiplying investments to move upmarket. According to the brand's CEO, Jonathan Akeroyd, the first half of this year will still bear the consequences of this long "construction" and will probably show mixed results again. Also, according to Akeroyd, who expressed his views in a press release, "the benefits of the strategic measures implemented will be seen in the long term, starting from the second half."

Meanwhile, Burberry's stock has dropped by 19% on the stock market since the beginning of the year, worrying shareholders. However, the conditions of the British economy are improving, which should benefit Burberry and British luxury brands in general. The difficulties and lack of revenue due to Brexit are fading, and the United Kingdom is once again starting to attract massive foreign investment. This breath of fresh air should restore consumer confidence.

However, Burberry still faces chronic internal issues, such as the lack of diversification in its offerings despite massive investments in store renovations around the globe and problems related to the situation in certain external markets. Indeed, the declining results are partly due to decreased demand in China and stagnation in the American market, which has penalized the entire balance sheet for the past year.