BUSINESS LIVE: Burberry hit by luxury slowdown; Imperial lifted by higher prices; Vertu cheers market revival

Yanmei Tang, analyst at Third Bridge:

‘Burberry is among the brands that have been affected by a slowdown observed across the wider luxury industry. High-end customers become pickier about what they buy.

‘Burberry is struggling to clearly define and elevate its brand identity, resulting in confusing messaging and poor sales growth. There is too much reliance on a new creative direction rather than making operational changes.

‘Burberry needs to take risks by launching innovative products to succeed. But they also face investor pressure and resource constraints as a standalone brand compared to giants like LVMH and Kering.

‘Burberry heavily relies on wholesale for revenue and will need to use promotions due to financial pressure. Predictions suggest continued challenges in 2024, with the US wholesale business likely to decline further. Over-reliance on wholesale has harmed the brand’s image and margins, despite boosting sales.

‘Setting ambitious targets to double leather goods sales and increase outerwear sales by 50% is unrealistic given the competitive pressures and operational challenges.’

Flutter’s boss – who is moving the company’s main stock market listing to New York – said axing stamp duty on share trading would make London more competitive.

Peter Jackson, chief executive of the gambling company behind Paddy Power and Betfair, said more could be done to bolster the stock market and stop firms fleeing over the Atlantic.

Flutter is ditching its primary listing in London this month and after investors backed its plan to move its main share trading hub to New York.

Car dealership Vertu Motors cheered record revenues £4.7billion for the year to the end of February, up from roughly £4billion last year, as the group enjoyed a solid revival in used car prices.

Chief executive Robert Forrester said: ‘It was pleasing to see the Group successfully navigating a difficult period of trading with declining used car values in the last few months of 2023. 

‘Used vehicle prices and margins have now stabilised and there has been strong cash generation from lower working capital reducing net debt below market expectations.’

He added that Vertu’s new financial year has started strongly, demonstrating ‘the robustness and strength of the group’s operations’.

Cigarette maker Imperial Brands profits ticked higher in the first half, thanks to increased sales of tobacco alternatives and higher prices.

Adjusted operating profit grew 2.8 per cent on a constant currency basis to £1.67billion for the six months to 31 March, in-line with analyst forecasts.

Boss Stefan Bomhard said: ‘Investment in consumer capabilities, more agile ways of working and further progress with our performance culture have made Imperial Brands a stronger business better able to deliver an acceleration in financial delivery.

‘This is demonstrated in the first half with the strongest organic top-line growth in more than ten years, amid a challenging external environment.

‘In tobacco, stronger brands and improved sales execution have enabled us both to consolidate the market share gains in our priority markets achieved in recent years and to deliver a strong price mix of 8.6%.

‘In Next Generation Products (NGP), we are steadily building scale within our footprint.’

Hundreds of jobs are at risk in North Yorkshire after the future of the UK’s most ambitious mining project in a generation was thrown into doubt.

Anglo American said it would slash funding at the Woodsmith fertiliser mine as part of a radical strategy to convince shareholders it was right to reject two takeover bids from rival miner BHP.

Chief executive Duncan Wanblad has spent weeks plotting a survival plan that includes breaking up the company, including hiving off its diamond arm De Beers and platinum mines.

Burberry profits slumped by more than a third last year as the group repositioned its iconic brand in the face of continued weak luxury market demand.

Adjusted operating profit fell by 34 per cent to £418million in the year to 30 March, as like-for-like sales fell 12 per cent in the final quarter and wiped out gains made earlier in the year.

Chief executive Jonathan Akeroyd said that while the financial results underperformed the company’s original expectations, it had made good progress refocusing its brand.

‘We are using what we have learned over the past year to fine tune our approach, while adapting to the external environment,’ he said, adding that he remained confident Burberry could be the ‘Modern British Luxury’ brand.