Burberry Shares Plunge 14.4% on Q3 FY24 Results, Then Recover

The Burberry Group plc (LON: BRBY) share price plunged by 14.4% after announcing a trading update for the 13 weeks to 30 December 2023 but had recouped over half of its losses at writing. The company alarmed investors after issuing a substantial profit warning due to the worldwide decline in the demand for luxury goods. 

The British luxury fashion company expects its adjusted operating profit for the fiscal year ending on 30 March 2024 to range from £410 million to £460 million. 

The revision comes just two months after the company's interim results, where it anticipated that its profits would be at the lower end of the then-consensus range of £552 million to £668 million.

Should Burberry reach the higher limit of its revised forecast, it would still signify a 27% decrease from the £634 million adjusted operating profit recorded in the previous year. 

The company's retail revenue saw a 7% decline in the third quarter, which ended on 31 December, amounting to £706 million. This downturn was reflected in a 4% drop in comparable store sales.

Regionally, comparable store sales in Asia Pacific saw a 3% increase compared to last year. However, there was a 5% decrease in Europe, the Middle East, India, and Africa, and a notable 15% fall in the Americas.

The impact of foreign exchange on Burberry's full-year revenue is now expected to be more substantial, estimated at £120 million (an increase from the previous £110 million forecast in November). The projected £60 million impact on adjusted operating profit remains the same.

In a concise trading update, Burberry acknowledged the impact of the slowdown in luxury demand on its current business performance.

Jonathan Akeroyd, Burberry’s Chief Executive Officer: “We are continuing to deliver the transition to our new modern British luxury creative expression for Burberry, which started appearing in our stores in early Autumn. We are still in the early stages of executing this, which has become more challenging against the backdrop of slowing luxury demand. We experienced a further deceleration in our key December trading period, and we now expect our full-year results to be below our previous guidance. We remain confident in our strategy to realise Burberry's potential, and we are committed to achieving our £4 billion revenue ambition.”

Burberry share price. 

The Burberry share price plunged 14.4% to trade at 1164.5p from Thursday’s closing price of 1360.5p.