British luxury fashion brand Burberry has acknowledged the impact of a global slowdown in luxury spending, expressing concerns about meeting its annual revenue forecast of low double-digit growth. The company, known for its iconic designs, reported a notable decline in comparable store sales growth in the second quarter, dropping to 1% from the initial 18%. The deceleration was attributed to a diminishing growth rate in China, influenced by rising inflation and economic uncertainty affecting consumer interest in luxury goods.
Burberry launched its first collection by designer Daniel Lee in September, hoping to invigorate its brand. However, the challenging economic climate has prompted a reassessment of its outlook. Other major players in the luxury sector, including LVMH and Kering, have also reported a slowdown in sales, reflecting a broader trend in the industry.
Despite these challenges, Burberry remains optimistic about its Winter ’23 collection, citing early indicators of demand as “encouraging.” The brand experienced success in key categories such as outerwear and leather goods during the first half of the fiscal year. Notably, the company observed a decline in demand from Chinese consumers in the second quarter, as luxury spending shifted overseas.
While European destinations benefited from increased tourist spending, with over half of the region’s expenditures coming from international visitors, the Americas faced a challenging quarter. Comparable store sales in the Americas dropped by 10%, contributing to the overall headwinds faced by Burberry.
Jonathan Akeroyd, Chief Executive of Burberry, acknowledged the current macroeconomic challenges but expressed confidence in the company’s strategic vision to position itself as a modern British luxury brand. Akeroyd affirmed the brand’s commitment to achieving its medium and long-term targets despite the complexities posed by the evolving economic landscape.