Burberry shares drop 16.4% due to profit warning and sales revenue decline

From Morningstar: 2024-07-15 09:09:00

Shares in Burberry (BRBY) have dropped 16.4% after the luxury brand issued a profit warning and suspended dividends. Sales revenue is down 21% to June 29. The company’s new chief executive, Joshua Schulman, replaces Jonathan Akeroyd after a 47% share price drop since the beginning of the year.

Burberry is facing a slowdown in sales globally, with the Asia Pacific Region experiencing a 23% sales drop. Mainland China and the Americas have also seen sales decrease by 21% and 23%, respectively. Luxury watch maker Swatch (SWAGY) has suffered a 10% share price fall after revealing a 70% drop in operating profits.

Analysts at Morningstar believe Burberry’s sales figures look weak. The replacement of Akeroyd with Schulman may signal a shift towards a more affordable direction for the brand. Performance in the luxury space varies, with Kering (KER) struggling to reboot Gucci’s popularity and Hermès (RMS) experiencing a jump in revenues.

Key Morningstar metrics for Burberry include a Fair Value Estimate of £157.00, a ★★★★★ Star Rating, a Narrow Economic Moat Rating, and a High Uncertainty Rating.



Read more at Morningstar: Burberry Shares Slide on Profit Warning