Burberry shares slump after profit warning
British luxury fashion house Burberry has cut its full-year profit forecast. It comes after a poor Christmas trading period and it blames a slowdown in demand for luxury goods and foreign exchange rates.
We already knew that things were not good after an update in November, but this has now been confirmed with the company telling investors that, “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”. Retail revenue for the 13-weeks ending 30 December 2023 fell 7% to £706 million.
(AI Video Summary)
Burberry stock drops following profit warning
Luxury fashion brand Burberry has recently released an update about their trading, and unfortunately, things have been quite tough for them towards the end of 2023. To put it simply, they have issued a warning that their profits will be lower than expected, and this has caused their stock to drop in value. If you take a look at their share price chart, you will see a clear decline, and it has even reached the lowest point since March 2020. Although there has been some buying activity after this initial drop, the stock is still down by 6% compared to what it was on Thursday.
Reason for decline
The main reason behind this decrease in stock value is that Burberry's revenue from their retail business, which involves selling their luxurious fashion items, has fallen by 7% to £706 million in the 13 weeks leading up to the end of December. The company believes that this decline is due to two main factors: the increasing difficulty of their new strategy, and the decreasing demand for luxury goods. As a result, they expect their overall results for the year to be lower than what they had predicted before.
This challenging trading period has really had a big impact on Burberry's stock, highlighting the difficulties that the company is currently facing. Although there has been some improvement in the stock's value since it hit its lowest point, the situation is still pretty tough for Burberry. It's not an easy ride for them at the moment, but hopefully, they will be able to work through these challenges and see better days ahead.
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