Burberry (BRBY) will release a trading update and host its annual general meeting on 15 July. The luxury goods group last updated the market in May with its full-year results announcement, which revealed a collapse in profits. Half of Burberry’s stores around the world were closed at the time, while barren airports and the absence of travelling shoppers have also deprived the luxury sector of one of its key income sources.
The short-term picture for luxury is grim and we’re braced for a weak business update. Restrictions on retail and travel are being relaxed and policy initiatives are being discussed in a bid to boost consumer spending, but it’s difficult to envisage significant pent-up demand for luxury goods being unleashed with the prospect of a damning recession on the horizon. Burberry warned in May that it expected its first quarter, running to June, “to be severely impacted with store closures likely to be at or near peak” for most of the period.
Burberry has pivoted much of its focus towards Asia, specifically China, which is a lucrative luxury market. We hope for some green shoots here and a boost to free cash flows, along with a plan for salvaging profits in what looks likely to be a sustained period of weakness for consumer spending and travel.
