Burberry: The Impact of War in the Middle East Affects the Recovery in the 4th Quarter

On Thursday, Burberry reported an increase in sales in the fourth quarter, with its recovery gaining momentum in the United States and China. However, the war in Iran and the slowdown in tourism weighed on revenues in its region, Europe, and the Middle East.

The global travel sector’s hit and the surge in energy costs have dashed hopes of a recovery in the luxury market, worth $400 billion, reducing profits and worsening the slowdown observed in recent years after the post-pandemic boom.

Burberry posted a 5% increase in comparable sales for the quarter ending on March 28, bringing annual growth to 2%. These figures align with analysts’ forecasts in a consensus established by the company.

But sales in the Europe, Middle East, India, and Africa (EMEIA) region fell by 2% in the fourth quarter, while those in the Americas and Greater China both rose by 10%, thanks to what the company described as a “renewed brand momentum.”

Since taking over Burberry in July 2024, CEO Joshua Schulman has overseen the brand’s turnaround by focusing on its iconic trench coats and scarves, while emphasizing its British heritage to a younger clientele and reducing costs.

A year after Burberry laid off 1,700 employees – a fifth of its global workforce – as part of a cost-cutting plan, Joshua Schulman stated on Thursday that this financial year marks a “decisive turning point,” with the company returning to profitable sales growth.

The operating profit for the year amounted to £115 million (€132.69 million), after a loss of £3 million the previous year.

Burberry also announced on Thursday that its chairman, Gerry Murphy, will retire during the year and be replaced by William Jackson.

(Reporting by Pushkala Aripaka in Bangalore and Helen Reid in London; French version by Rihab Latrache, edited by Augustin Turpin)