Burberry warns on profit outlook again as luxury demand wanes

LONDON (Reuters) -British luxury fashion brand Burberry on Friday warned on its full year profit outlook for the second time in three months, blaming a further slowing in global demand.

The latest warning is a major blow to CEO Jonathan Akeroyd’s turnaround plan as he tries to move upmarket under the creative guidance of designer Daniel Lee, who launched his first collection last September.

Having experienced a deceleration in trading in its key December trading period, Burberry now expects full-year adjusted operating profit in a range between 410 million pounds ($523 million) and 460 million pounds.

In November, it had said adjusted operating profit would be towards the lower end of analysts’ forecasts at the time of 552 million pounds to 668 million pounds.

Rivals, led by French luxury leaders LVMH and Kering (EPA:), have also reported lower demand for high-end goods in key markets including the United States, Europe and China as the post-pandemic spree wears off.

Conflict in the Middle East added geopolitical uncertainty to a luxury industry outlook already clouded by inflation, with shoppers in the U.S. and Europe tightening their purse strings while expectations for a strong post-pandemic rebound in China were derailed by a property crisis.

Burberry, whose shares have fallen 39% over the last year, said retail revenue in the 13 weeks to Dec. 30 was down 7% at 706 million pounds while comparable store sales fell 4%. They were up 3% in the Asia Pacific region but down 5% in Europe and down 15% in the Americas.

($1 = 0.7833 pounds)