Burberry back in the black but Iran war threatens to disrupt turnaround efforts
Burberry is back in the black but warned of darkening clouds amid the war in the Middle East. The British luxury company hailed further signs of a turnaround under boss Joshua Schulman, as it reported customers had resonated with its staple outerwear products, including trench coats and scarves.Pre-tax profits for the year to March were £49million, bringing the retailer back into the black after a £66million loss last year. But this means the brand missed forecasts for £88 million, according to data site Refinitiv. Burberry has recruited celebrities including Bridgerton actress Simone Ashley to help advertise its clothesAnd the group - whose profile was boosted when its designs were worn by Cher and other celebrities at New York's Met Gala last week - also flagged concerns relating to the Middle East.It said it was ‘mindful of the uncertain geopolitical and macro-economic environment and its potential impact on consumer confidence.’Speaking to reporters, boss Schulman said that 'this past year has marked a meaningful inflection for Burberry' and its efforts are 'attracting a new generation of Gen Z customers to the brand.'Sales in its division covering Europe, the Middle East, and Africa, fell 2 per cent in the last quarter due to ‘the continued impact of reduced tourist activity in the region and the Middle East conflict,’ it said.Luxury firms are facing a gloomy economic backdrop after hopes that this year could see green shoots of recovery following years of slowing sales, once the post-Covid ‘revenge spending’ cooled.Read More Gilts and pound steady as Streeting quits; Surprise GDP bounce | MARKETS LIVE But the conflict has disrupted tourism to European shopping hotspots such as Paris, as well as reducing footfall to shopping malls in key luxury hubs like Dubai.Schulman has been on a turnaround drive to restore the group’s reputation for 'timeless British luxury'.Robyn Duffy, consumer markets senior analyst at RSM UK, said: ‘In the context of a luxury sector that has endured two difficult years globally, modest growth following last year’s sharp decline still marks a notable improvement in trajectory for Burberry and suggests the early stages of a recovery may now be emerging.’She said that the 'major risk' in the year ahead would be the fallout from the Middle East war. 'Not only will input costs come under pressure impacting gains made on margins this year, but a slowdown in global tourism, particularly in European markets could negatively impact the momentum Burberry has carefully cultivated,' Duffy said.But speaking to journalists, Schulman attempted to shrug off fears of the conflict hitting luxury shoppers globally. He said the brand had not seen any impact ‘beyond the Middle East itself and some impact on travel in the region.’He said the hit had been ‘quite localised’ so far and the Middle East makes up just 2 per cent of its sales, which is ‘substantially less’ than other brands.Burberry also announced that William Jackson, the founder and former boss of private equity group Bridgepoint, will succeed Gerry Murphy as chair later this year. AJ BellAJ BellEasy investing and ready-made portfoliosHargreaves LansdownHargreaves LansdownFree fund dealing and investment ideasinteractive investorinteractive investorFlat-fee investing from £4.99 per monthFreetradeFreetradeInvesting Isa now free on basic planTrading 212Trading 212Free share dealing and no account feeAffiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.Compare the best investing account for you
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Burberry back in the black but Iran war threatens to disrupt turnaround efforts
