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The ailing luxury market is also affecting British icon Burberry, whose profits are plummeting due to disappointing American and Chinese sales. Improvement is not immediately in sight.
Weak outlook
Burberry had already issued a profit warning in January, and the figures for the past financial year (ending in March) confirm the weak outlook for the luxury market. The British brand’s pre-tax profit slumped from 634 to 383 million pounds (450 million euros). Meanwhile, sales fell 4 % to 2.9 billion pounds (3.4 billion euros).
Sales were particularly disappointing in the United States and China: the fourth quarter was very weak and the current year will also be difficult, the group confirmed. CEO Jonathan Akeroyd hopes to turn the tide with a strategy that positions Burberry higher in the market and plays up the brand’s British character more strongly.
Luxury group Kering, parent company of brands like Balenciaga, Gucci and Yves Saint Laurent, also warned a few weeks ago for a sharp fall in profits after disappointing sales in China.
