Burberry Trims Profit Outlook: Are Luxury Goods Losing Charm?
Portfolio Pulse from Lekha Gupta
Burberry Group PLC (OTC:BURBY) reported a 7% Y/Y decline in retail revenue and a 4% Y/Y drop in comparable store sales for the 13 weeks ending Dec. 30, 2023. The company lowered its FY24 adjusted operating profit forecast to £410-460 million, citing a slowdown in luxury goods demand. Shares fell 7% in morning trading, and other luxury stocks like LVMH (OTC:LVMHF) and Kering SA (OTC:PPRUY) also saw declines. Burberry remains committed to a £4 billion revenue target but expects currency headwinds and a high-single-digit percentage decline in wholesale revenue for FY24.
January 12, 2024 | 3:57 pm
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NEGATIVE IMPACT
Burberry reported a decline in retail revenue and lowered its profit outlook, leading to a 7% drop in its share price.
The negative earnings report and lowered profit outlook directly impact Burberry's financial health and investor sentiment, likely leading to a short-term decline in stock price.
CONFIDENCE 90
IMPORTANCE 90
RELEVANCE 100
NEGATIVE IMPACT
LVMH shares declined by 2% in response to Burberry's negative earnings report, indicating a potential sector-wide concern.
Burberry's performance and outlook may reflect broader market trends affecting the luxury goods sector, which could negatively impact LVMH's stock in the short term.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEGATIVE IMPACT
Kering SA's stock also fell by 2% following Burberry's announcement, suggesting market sensitivity to news from luxury peers.
The decline in Kering's stock price in reaction to Burberry's report suggests that investors may be concerned about similar issues affecting Kering, potentially leading to a short-term negative impact.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70