Burberry Set For Sales Decline As Brand Revival Stumbles

By Maria Mukaranda

Bracing for another quarter of declining sales, analysts are concerned about the effectiveness of the brands revival efforts.

The iconic British fashion house, known for its trench coats and checkered pattern, is expected to report its weakest performance this year when it releases its results. "As the sole British brand of scale operating independently – a rarity in the luxury industry – Burberry boasts a rich heritage and the opportunity to enhance its iconic product lines and accessories," Abrdn Investment Manager Sasha Kachanova told The Telegraph in a recent interview.

The British giant is a singularity, specifically in the sense that it is one of the few fashion giants that does not operate under a conglomerate such as LVMH or Kering, as is increasingly the norm in the current fashion climate. The historic fashion house and its newly fangled signature “Knight Blue” - a new signature house colour introduced under Chief Creative Officer Daniel Lee - have made a statement in the past few fashion seasons, both on the runway and via several guerrilla tactics.

Recent financial analyses indicate that Burberry has experienced a significant downturn in performance within the FTSE 100 Index this year, primarily due to a slowdown in luxury goods demand, particularly in the Asian market. The issuance of a profit warning by Burberry's competitor, Kering, which owns brands like Gucci, Bottega Veneta, and YSL, catalysed a decline in Burberry's stock prices. Following Kering's announcement of an expected 45% decrease in operating income for the first half of the year, Burberry's shares plummeted by 2.5% on the previous day. This drop compounded the overall decline, resulting in Burberry losing almost 20% of its market value since the year's commencement. As a consequence, the British fashion house's total worth now stands at £4 billion.

Not all luxury fashion houses are following the same trajectory, however. The Prada Group, which operates Miu Miu and Prada, reported an 18% jump in first-quarter retail sales - a feat just one of several wins in recent Prada history.

The luxury house has yet to comment: with rumoured whispers of Burberry being a possible takeover target and with the pound at a low level too, the combined effect could hint at a fairly attractive offer for potential bidders - if there are to be any.