The flagging luxury market is also affecting British icon Burberry: profits are plummeting due to disappointing sales in the US and China. 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, which closed at the end of March, confirm the weak outlook for the luxury market: pre-tax profit slumped from 634 million pounds (738 million euros) to 383 million pounds (446 million euros), while sales fell 4% to 2.9 billion pounds (3.37 billion euros).
Sales were disappointing in both the US 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 Gucci, Yves Saint Laurent, Balenciaga and Alexander McQueen, also warned a few weeks ago of a sharp fall in profits after disappointing sales in China.