British fashion brand Burberry is the latest victim of a sales slowdown affecting makers of luxury goods. The company, best known for its classic trenchcoats and signature check pattern, issued a profit warning, suspended its dividend payment and announced that it was ousting its CEO in a recent business update. First-quarter performance was "disappointing," Burberry said, blaming "slowing luxury demand across all key regions," including China, the Americas and Europe.
Same-store sales for the quarter plunged 21% compared to the previous year. Japan was the only place where sales rose because of spending by wealthy travelers from China and other nearby Asian countries taking advantage of the weak yen. Chairman Gerry Murphy said if the weak demand continues, Burberry expects to have an operating loss for the first half of its fiscal year.
Burberry shares have tumbled by two-thirds over the past year. The company's woes are part of a wider downturn in the luxury goods market, for which analysts expect flat 2024 sales following a post-pandemic consumer spending surge. Other European luxury goods companies, including Switzerland's Richemont and France's LVMH, have also warned of waning demand.
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