Burberry Shares Tumble as Q1 Performance Disappoints

Burberry's (LON: BRBY) shares plunged over 11% following a disappointing first-quarter FY25 performance update.

The luxury fashion house reported a 22% drop in retail revenue, down to £458 million from £589 million in the previous year. Comparable store sales fell 21%, with significant declines across key regions: Asia Pacific and the Americas both down 23%, and EMEIA down 16%.

Gerry Murphy, Burberry's Chair, acknowledged the challenging market conditions and swift creative transition, which exacerbated the company's struggles.

“Our Q1 FY25 performance is disappointing. The weakness we highlighted coming into FY25 has deepened,” Murphy stated, emphasizing the luxury market's unexpected difficulties.

The company said it is taking decisive actions to counteract the recent setbacks, including suspending dividend payments for FY25 to maintain a strong balance sheet and its capacity to invest in Burberry's long-term growth.

Burberry added that it plans to rebalance its product offerings to appeal more to its core customers while introducing new items. Cost-saving measures and operational efficiencies are also being implemented to mitigate the impact of inflation.

Burberry's outlook remains cautious, with the potential for an operating loss in the first half of FY25 if current trends persist. The company also announced a leadership change, appointing Joshua Schulman as CEO, replacing Jonathan Akeroyd.

Despite the bleak short-term forecast, Burberry remains optimistic about its long-term growth. The company expects improvements in the second half of FY25 through strategic adjustments and enhanced customer engagement, aiming to fortify its competitive position in the luxury market.