Burberry debts more than double to £1.1bn due to tourism tax

Burberry boss Jonathan Akeroyd says London is 'losing'; to other major European cities. Photo: Dave Bennett/Getty Images

This has raised fears that sales in London will lag further during the Summer Olympics in Paris, when millions of tourists are expected to flock to Europe.

Mr Comments Akeroyd's comments came as Burberry said profits had fallen by more than a third for the year to the end of March, falling to £418 million from £657 million a year earlier.

Shares fell more than 5% on Wednesday, giving Burberry its biggest fall in the FTSE 100, despite the retailer previously warning of a fall in profits.

It follows a torrid period for Burberry as it tries to revive demand for their brand by focusing on their British heritage.

Burberry has hired Mr Akeroyd, a former Versace boss, to lead the company in late 2021. The company later hired fellow Brit Daniel Lee as its creative director in 2022.

However, while Mr Lee's collections were praised for showcasing Burberry's strengths in areas such as outerwear, critics argued that the lines are not attracting buyers.

Citibank analysts said: «The jury is still out on whether Daniel Lee's brand aesthetic can translate into stronger commercial success and double-digit growth in a polarized demand environment.»

p>Speaking on Wednesday, Mr Akeroyd said the group had “rebalanced” its offering, adding: “When you launch a new aesthetic, as we did in September, you need to put a marker down. But there are lessons to be learned from this.”

As part of its rebalancing plans, Burberry is expected to focus on its classic designs in areas such as menswear.

Bernstein analyst Luca Solca said it was clear that Burberry was «significantly underperforming its competitors and the market», adding: «Regardless of the reason, the brand's relaunch plan is not working at the moment.»

Burberry's share price has been under pressure rumors that Burberry could be a takeover target.

Abrdn investment manager Sasha Kachanova said the company's low valuation could attract buyers: «As the only large-scale British brand operating independently (which is rare in the luxury industry) , it boasts a rich heritage and the ability to enhance its iconic product and accessory lines.”

The brand's overall sales were down 4% for the year as Burberry was hit by lower spending in China since the start of 2024.

The company said sales in mainland China fell 19% for the year. in the three months to the end of March.

Burberry said store sales in its Americas region also fell 12%.

Mr Akeroyd said the decline was not only due to — as young, aspiring shoppers cut back on spending, saying: «It just seems like it's more relevant to the luxury sector as a whole.»

Other luxury giants have similarly warned of a slowing market, including including Gucci owner Kering, which last month said profits would fall as they hit about 45% this year.

Burberry said it expected the market to continue to be tough in the six months to September

Mr Akeroyd said: “We are investing in both markets.” – in China and the USA – so I think we’ll see how this develops.”