Burberry Shares Fall 7% as Investors Question Outlook Despite Sales Growth

Burberry shares fell around 7% on Friday after investors were left disappointed by the luxury group’s outlook, despite the company reporting a return to sales growth across all product categories.

Chief executive Joshua Schulman also confirmed that Burberry will not change its new remuneration plan, which could hand him a pay package worth up to £12.2 million.

The comments follow this week’s annual meeting, where around 35% of shareholders voted against the plan.

Schulman said Burberry respected shareholders and appreciated their engagement on the issue, adding that the company had consulted with many investors during the process and would not be making changes.

The trading update showed stronger sales in the US and South Korea, offset by weaker performance in the Middle East and Europe.

Burberry said tourist flows in those regions had been affected by the Iran conflict, with Asian tourists cutting back on travel to Europe, particularly where journeys involved connecting flights through the Middle East.

Schulman said Burberry’s European stores were benefiting from a “halo effect” created by successful marketing in the US, with American tourists buying the brand while visiting Europe.

Sales at the London and Paris flagship stores were described as strong, although Schulman said the London store could perform better if the UK restored VAT-free shopping for tourists.

He said Burberry would like incoming Prime Minister Andy Burnham to introduce policies that improve competitiveness and make the UK more attractive for tourists.

Despite the return to sales growth, investors appeared underwhelmed by the lack of a more bullish outlook, sending Burberry shares lower in early trading.