Last week, it was reported the luxury brand Burberry was set to slash hundreds of jobs after a dramatic fall in profit. But this time last year, the company had just reported a bumper set of results for the first quarter of its 2023 financial year. Burberry shares jumped around six per cent in mid-July 2023 when it said sales for the first quarter had grown 18 per cent.
Since then, the company’s share price has fallen 57 per cent, profit has plunged and debt has more than doubled. So how did we get here? Burberry blamed the problems on London’s tourist tax and slower global demand for luxury goods. However, Burberry seems to have lost the ‘aspirational consumer.
’ Luxury companies pride themselves on catering to the top one per cent, but according to analysts, Burberry is more exposed to ‘aspirational’ luxury buyers – the top 10 per cent of the market – than super-high-end luxury brands. These less wealthy shoppers account for about $273.5bn in fashion spending annually, according to a recent McKinsey study .
The harsh economic environment has had a bigger impact on this bracket of consumers than the top one per cent. Burberry’s a shop where a swimsuit set costs £450 and a trench coat costs more than the average monthly rent in London—a staggering £2,290 – a steep price for an aspirational consumer during a cost-of-living crisis. “Inflation and slowing economic growth have affected most luxury brands,” Ana Friedlander, Industry Strategy Director for.