Burberry Shares Down 51% Over the Last Year: Here’s Why

Iconic British luxury brand Burberry has seen its share price plummet a significant 51% in the last year. This decline comes amidst a challenging backdrop for UK luxury brands.

Earlier this week, Dr. Martens revealed that its annual profits had plummeted due to dwindling demand from US shoppers. Other brands are also having a hard time. For example, Mulberry has also witnessed a fall in sales.

Amidst the squeeze felt by Burberry shoppers, the company is strategically focusing on its turnaround plans, aiming to ‘refocus' on its brand. This move is hoped to inspire optimism for the future.

Even so, over the past year, the fashion giant's shares have fallen back to levels last seen when the stock dropped to its pandemic lows in 2020.

Leading up to its May 15 results, analysts at Jefferies said the broader debate was whether the corrective design action taken from the 2024 A/W season “will be sufficient to underpin a cons looking to flat profits in the year ahead.”

Burberry shares fell more than 7% following the results, with revenue flat year-on-year and profits down as consumers continue to feel the squeeze from inflation. In addition, Burberry stated that it expects the first half to remain challenging.

“In the context of a still uncertain external environment, we expect H1 to remain challenging. We expect to see the benefit of the actions we are taking from H2,” the company commented. “We will continue to balance investment in consumer-facing areas with disciplined cost control to support our growth ambition.”

The brand's sales struggled in the US, but China is also another concern. Mainland China increased 2% in the year overall, but fell by a significant -19% in Burberry's Q4.

Overall, it's safe to say Burberry has been hit by a double whammy: a tough global economic climate with inflation squeezing consumer spending, especially in China, a key market, and questions about whether their brand refresh is resonating with luxury shoppers.