Shares
in
Burberry
slumped
on
Friday
morning
as
it
issued
another
profit
warning
amid
an
ongoing
slowdown
in
the
luxury
sector.
Ahead
of
a
third-quarter
trading
update
on
January
19,
Burberry
(BRBY)
now
says
adjusted
operating
profit
for
the
year
ending
March
30
will
be
between
£410
million
and
£460
million.
“We
experienced
a
further
deceleration
in
our
key
December
trading
period
and
we
now
expect
our
full
year
results
to
be
below
our
previous
guidance,”
chief
executive
Jonathan
Akeroyd
said.
Significant
Profit
Downgrade
In
November,
the
luxury
fashion
group
had
provided
guidance
that
profits
would
be
between
£552
million
to
£668
million.
The
company
made
£634
million
in
the
2023
financial
year.
At
that
point
in
November
2023
the
shares
also
fell
significantly.
Morningstar
luxury
analyst
Jelena
Sokolova
describes
this
as
a
“significant”
profit
downgrade.
In
previous
periods,
a
slowdown
in
luxury
spending
in
China
was
blamed.
Now
Europeans
and
American
spending
trends
are
flagging.
“Deceleration
is
mainly
driven
by
the
developed
markets.
It
is
something
I’ve
been
cautioning
about
for
the
last
one-two
years,
as
pandemic
times
boom
in
spending
by
Americans
and
Europeans
was
not
maintainable
(driven
by
pandemic-time
savings)
and
now
is
unwinding,”
she
says.
“Chinese
spending
is
failing
to
offset
this
–
sales
in
the
Mainland
China
were
up
8%
but
the
base
of
comparison
is
low
as
prior
calendar
year’s
last
quarter
was
impacted
by
lockdowns.
Also
demand
in
South
Korea
markedly
weakened
(down
10%).”
We
have
to
wait
to
see
what
other
listed
luxury
groups
say
before
making
judgments
about
the
sector,
Sokolova
says.
“Since
Burberry
is
the
first
to
report
(or
profit
warn)
it’s
hard
to
say
to
what
extent
the
problems
are
industry-wide
(as
their
release
suggests)
or
Burberry
specific.”
By
midmorning
the
company’s
shares
were
down
nearly
8%
to
£12.57,
and
they’re
off
around
44%
since
the
same
period
of
2023.
Morningstar
Metrics
for
Burberry
Price:
£12.67
Fair
Value:
£24.60
Morningstar
Analyst
Rating:
★★★★★
Uncertainty
Rating:
High
Economic
Moat:
Narrow
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