BURBERRY GROUP PLC has released its first quarter trading update for FY25, revealing a disappointing performance. The company's retail revenue for the 13 weeks ended 29 June 2024 saw a significant decline of 22% reported FX and 20% at constant exchange rates (CER) compared to the same period last year. The comparable store sales also plummeted by 21% during this period. The company has decided to suspend dividend payments for FY25 due to the challenging market conditions and the possibility of reporting an operating loss for the first half of the year.
Burberry's Chair, Gerry Murphy, expressed the company's focus on taking decisive action to rebalance its offer and reconnect with its core customer base. The company aims to deliver relevant newness and emphasize the timeless, classic attributes that Burberry is known for. The immediate focus includes refining the product offer, brand communication, and improving customer conversion online. The company also plans to drive operational efficiencies and deliver cost savings to offset the impact of inflation.
The company also announced the appointment of Joshua Schulman as the new Chief Executive Officer and Executive Director, replacing Jonathan Akeroyd, who is stepping down and leaving the company with immediate effect by mutual agreement with the Board.
Burberry's outlook for FY25 indicates a continuation of the trading slowdown experienced in Q1, with the possibility of reporting a H1 FY25 operating loss and an operating profit below the current consensus for the full year. The company expects the actions being taken to start delivering improvement in the second half and strengthen its competitive position for long-term growth.
The regional comparable sales performance showed a decline in all key regions, with Asia Pacific, EMEIA, and the Americas experiencing significant decreases. The company highlighted the impact of slowing luxury demand and macroeconomic uncertainty contributing to the sector slowdown.
Burberry expects retail space to remain broadly stable, wholesale revenue to decline, and capital expenditure to be around £150m for FY25. The company also anticipates a currency headwind of approximately £55m to revenue and £20m to operating profit in FY25, based on foreign exchange rates effective as of 28 June 2024.