The Asia Pacific and Americas regions performed the worst for Burberry last quarter, with sales sliding by 17% and 12%, respectively. The brand's creative director, "Daniel Lee," has tried to return to Burberry's British roots by highlighting the label's famous check pattern in products such as its rocking horse bags... which can sell for £1,890 ($2,372) in London.
Dates of events related to this: * Last month: Burberry's fiscal year began
* March: Quarter ended
* Last week: Chief Financial Officer Kate Ferry took a leave of absence following unscheduled surgery
* Wednesday: Burberry issued a statement warning of a challenging first half ← →
In The News:
Burberry Group Plc warned of a challenging first half after the British maker of trench coats reported tumbling sales on weak demand in China and the US.
Comparable store sales in the quarter ended in March fell 12% from a year earlier, Burberry said in a statement Wednesday, in line with the expectations of analysts. The company also warned that wholesale revenue will fall by about 25% in the first half of its fiscal year, which began last month.
The British label has been pursuing a turnaround that's taking time to bear fruit as demand cools for high-end goods. The Asia Pacific and Americas regions performed the worst for Burberry last quarter, with sales sliding by 17% and 12%, respectively.
The brand's creative director, Daniel Lee, has tried to go back to Burberry's British roots by highlighting the label's famous check pattern in products such as its rocking horse bags , which can sell for £1,890 ($2,372) in London. But last year, some analysts said Burberry's price points were too high for the targeted customers.
“Burberry is finding it tough to execute its brand development plan against a backdrop of moderating consumer demand,” Luca Solca, an analyst at Bernstein, wrote in a note Wednesday.
The shares fell as much as 4.2% in early London trading. They've dropped by more than half in the past 12 months.
Burberry has also faced a management setback after Chief Financial Officer Kate Ferry took a leave of absence last week following unscheduled surgery.
Returning to... Burberry Sales Plummet 12%:
Burberry sales plummet 12% in Q1.
The 12% decline in comparable store sales is a significant blow to Burberry's efforts to revamp its brand. Highlights from the quarter include a 17% slide in sales in the Asia Pacific region and a 12% decline in the Americas. Wholesale revenue is also set to fall by 25% in the first half of the fiscal year. The company's attempts to return to its British roots have not yet paid off, with some analysts arguing that its prices are still too high for the targeted customers.Burberry's creative director, Daniel Lee, has been trying to highlight the brand's iconic check pattern in products such as the rocking horse bag, which can sell for £1,890. However, "the company still faces a challenging road ahead.".. needing to execute its brand development plan in a difficult market.
Wholesale revenue drops 25% in H1 warning.
The 25% decline in wholesale revenue is a major concern for Burberry as it indicates a significant markdown in the brand's ability to reach its target customers. The warning comes as the company's strategy to focus on its own retail stores and away from wholesale partnerships has yet to yield desired results. The decline in wholesale revenue is attributed to a mix of factors, including weaker demand from department stores and a shift away from tie-ups with third-party retailers. For Burberry, maintaining its wholesale revenue is crucial as it still accounts for a significant chunk of its sales.The warning has sparked concerns that the brand may struggle to meet its financial targets for the year... further fuelling concerns about its long-term sustainability.
Burberry struggles to adjust to changing demand.
Burberry's struggles to adapt to changing consumer demand have been ongoing, with the brand's efforts to revamp its image and product range not yet yielding desired results. Despite its attempts to return to its British roots and appeal to a broader customer base, the brand has found it difficult to adjust to the shift towards more affordable and sustainable fashion.The decline in sales and revenue has been a result of Burberry's inability to tap into the changing preferences of its target customers, "who are increasingly opting for more accessible and responsible luxury options." As the luxury market continues to evolve... Burberry will need to undertake a more seismic overhaul of its strategy to avoid being left behind.
