Burberry follows luxury market into slump

Burberry is adjusting its expectations downwards, for the second time in three months. To counter this slump, the brand wants to become even more expensive and exclusive.

December drop

Burberry is now forecasting an operating profit of just 410 to 460 million pounds (470 to 530 million euros), which is another 25 % lower than its already lowered November forecasts. For the full quarter to 30 December, retail sales were down 7 %, with a clear drop in December.

Sales slowed down in most regions, but most sharply in the Americas, where comparable sales fell 15 %. In Europe, the decline was 5 %. Chinese sales rose 8 %, but even that was less than expected.

Aspirational customers

Burberry mainly blames “aspirational” shoppers for giving up: these are less affluent consumers who aspire to afford a luxury item as a status symbol. However, wealthier customers are now also holding back. Remarkably, creative director Daniel Lee wants to make Burberry even more expensive and exclusive: his first collection was released to selected stores last autumn.

Demand for luxury goods, a market that until now has been spared any recession, is currently dropping worldwide. Even at luxury houses like LVMH and Kering, anxiety is rising, not least among shareholders.