Burberry reported its results for the year ended March 30, 2024, on Wednesday, revealing a 40% decline in pre-tax profit.
The luxury fashion brand said pre-tax profit for the year came in at £383 million, down 40% from the £634 million reported last year.
Burberry said slowing luxury demand impacted its results for the year, making execution against its plan challenging.
"While our FY24 financial results underperformed our original expectations, we have made good progress refocusing our brand image, evolving our product, and strengthening distribution while delivering operational improvements," said Jonathan Akeroyd, Burberry's Chief Executive Officer. "We remain confident in our strategy to realise Burberry's potential as the Modern British Luxury brand and in our ability to successfully navigate this period."
The disappointing results have seen Burberry's stock price decline by 3.7% so far on Wednesday.
The FSTE 100 company's revenue for the quarter fell 4% to £2.97 billion from £3.09 billion the previous year.
Looking ahead, Burberry said the environment is still uncertain, and they expect the first half of the year to remain challenging. They expect to see the benefit of the actions it is taking from H2. Wholesale revenue is estimated to fall by around -25% in the first half. Based on foreign exchange rates effective April 25, the company now expects a currency headwind of around £30m to revenue and approximately £20m to adjusted operating profit in FY25.
"We will continue to balance investment in consumer-facing areas with disciplined cost control to support our growth ambition," said Burberry. "We have identified cost savings to enable us to offset the impact of inflation in the second half."
Following the report, analysts at Morgan Stanley said that overall they found the outlook statement relatively vague. "We expect near-term H1 '25 consensus estimates to come down in particular," said the firm. "We believe the conference call will be key today as investors look to gain further clarity on the company's projected financials, in particular the outlook for gross margin, as well as refined strategy (incl. key recent learnings) to drive improved LFL performance."
UBS stated Burberry's H2 results came in better than feared, with slightly better like-for-like and H2 profit +7% above consensus due to better opex control.
"The weak H1 wholesale guidance (-25% vs. cons -4%), which is the most profitable channel for BRBY, suggests the outlook for FY25 may be weaker, at least in H1, given the comments about the company's actions on efficiencies taking effect in H2," wrote the bank.
Analysts at RBC Capital said that overall, the results are neutral in nature, confirming no worse than already lowered guidance (in January) for FY24. "What is missing and likely more price sensitive is any indication on current trading and FY25E earnings (particularly 1H25E)," said the firm.