Burberry splits a seam with profit warning

Burberry's share price slumped 18% after the fashion house was forced to issue a profit warning. Sales for the 10 weeks to September 8 have flat-lined.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
The hem is starting to fray over at Burberry. After a year of record growth, the fashion chain is finally feeling the effects of the global downturn, with like-for-like sales remaining unchanged on last year. ‘The environment is becoming more challenging,’ says chief executive Angela Ahrendts. ‘Second quarter retail sales growth has slowed.’

Burberry’s retail sales, which strip out wholesale and licensing revenues, are up 6% for the quarter, a slowdown from the 14% growth in Q1. And earnings for the year are looking decidedly dowdy: Burberry has confirmed that its underlying pre-tax profit for the year to March 31 2013 will be at the lower end of market expectations. According to recent forecasts, analysts were expecting between £407m and £455m.

After the unscheduled trading update, shares in Burberry fell 17.8% to £11.31 in early morning trading. And it’s not just Burberry feeling the pinch in the luxury sector. LVMH was also down 4.1% today at €126.85 and PPR’s shares have dropped 3.67% to hit €123.20.

But as sales of luxury goods start to wane, a more mainstream brand is waxing once more. SuperGroup has just reported strong revenues for the 13 weeks to July 29, with total sales up 20% and like-for-likes at 1.7%.

This is a turn up for the books – especially after all the trouble the SuperGroup bean counters have had managing theirs. Last we heard, annual profits were down 15% and heads were rolling in the company’s wholesale division. But CEO Julian Dunkerton reckons that the business is back on track, saved by an unlikely champion: the British weather. Persistant rainfall has driven up sales of Superdry jackets, gilets, and sweatshirts, while aggressive discounting has shifted old stock.  

Another winner in today’s retail round-up is none other than MT 35 Under 35 speaker Anya Hindmarch. The queen of handbags has reported a 16% jump in revenue to £23.2m at her eponymous brand, and is planning a big push into the Middle East this year.

Ahrendts will not be please that Hindmarch’s high-end bags are selling while Burberry accessories are not. Handbags at dawn to settle the score, ladies?

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