Burberry Group Plc is grappling with significant challenges, as evidenced by its recent report detailing a 22% year-over-year decline in revenue, amounting to £1,086 million, roughly equivalent to $1,380 million, for the first half of fiscal year 2025. This downturn, which spans the 26 weeks ending September 28, 2024, marks a stark contrast to last year’s performance and brings to light issues within the luxury fashion brand.
The adjusted operating profit shifted dramatically from a healthy £223 million in the previous year to a substantial loss of £41 million, indicating a worrying trend for the company. Retail sales witnessed a notable decrease of 20%, particularly impacting regions like Asia Pacific and the Americas. Comparable store sales in Europe, the Middle East, Africa, and India (EMEIA) fell by 13%, while the Americas saw a steeper decline of 21%.
Burberry’s adjusted operating profit margin experienced a steep drop from 15.9% to -3.8%, a staggering loss of 1,970 basis points. Diluted earnings per share also took a hit, plunging 143% at reported foreign exchange to -18.3 pence, down from 42.1 pence year over year. Additionally, the reported operating profit transitioned from a profit of £223 million last year to a loss of £53 million, marking a 2,080 basis point decrease in operating profit margin.
In breaking down the sales performance by quarter, the first quarter showed a troubling 21% decrease, with declines in Asia Pacific, EMEIA, and the Americas at 23%, 16%, and 23%, respectively. The second quarter didn’t fare much better, with overall sales down by 20%. Comparable store sales for the first half reflect a grim reality, with a 20% drop, including a 25% decline in Asia Pacific.
Burberry’s CEO, Joshua Schulman, highlighted several underlying factors contributing to this underperformance, pinpointing inconsistent brand execution and a diminished focus on core categories like outerwear. Schulman expressed urgency in addressing these issues and aims to stabilize the business, steering Burberry towards sustainable, profitable growth. He emphasized the brand’s strong appeal in luxury markets and its authority in the outerwear segment, which still shows resilience.
In a bid to rejuvenate the brand’s image and performance, Burberry has unveiled a strategic initiative called “Burberry Forward.” This plan aims to reconnect the brand with its foundational purpose and tap into its strengths to capture a broader luxury customer base with a disciplined approach to their product offerings. Schulman remains optimistic, asserting that the potential for Burberry lies ahead as they work diligently to improve their market standing and create long-term value.
