Key Points:
– Burberry's profits affected by slowdown in demand for luxury goods
– Shares fall over 7% and are now half the value they were last May
– Retail revenues for last three months of 2023 fell 7% to £706million
– Full-year profits expected to be between £410million and £460million
– Unfavourable currency exchange rates could impact revenues and profits
– Sales rebound reported in China and Japan, but sales in America down 15%
Article:
Shares in Burberry dropped by over 7 per cent on Thursday after the luxury fashion house announced that its profits would be impacted by a slowdown in demand for its high-end products. Wealthy shoppers tightening their belts in the run-up to Christmas have hit the London-based brand hard. This follows a previous update in November which also caused Burberry's shares to fall. In fact, the shares are now only worth half the value they were last May. Retail revenues for the last quarter of 2023 also fell by 7 per cent to £706 million, with like-for-like store sales down by 4 per cent.
Russ Mould, investment director at AJ Bell, commented on the situation, saying: "The idea that wealthier individuals would completely brush off the cost-of-living crisis has been thrown in the bin. No sector is immune from such pressures and over the past six months we’ve seen cracks appearing."
Burberry has projected that its full-year profits, which will be released in March, will be between £410 million and £460 million. However, the company's boss, Jonathan Akeroyd, has warned that unfavourable currency exchange rates could negatively impact revenues by £120 million and profits by £60 million.
While sales in America have suffered, experiencing a 15 per cent decline, there has been a rebound in sales in China and Japan.
Shell petrol stations found to be most expensive in the UK
In other news, a recent study by transport charity RAC Foundation has found that Shell petrol stations are the most expensive in the UK. On Thursday, Shell pumps were charging an average of 142.6p per litre, compared to the cheapest chain Morrisons' price of 136.9p. The average price of petrol across the country this week was 139.7p, the lowest level since October 2021.
Lower mortgage rates expected to boost demand in housing market
Affordable homes provider Vistry has predicted that lower mortgage rates will stimulate demand in the housing market this year. The company built 16,124 new homes in 2023, which is a decrease of 5.4 per cent from the previous year. Vistry estimates that its profits for the year will amount to around £418 million.
