Adjusted operating profit should be £410 million to £460 million ($523 million to $587 million) in the year through March, Burberry said Friday in an unscheduled trading update. Burberry previously forecast earnings of as much as £668 million.

The stock fell as much as 15 percent in London, the steepest intraday decline in more than a decade. The shares lost almost a third of their value last year.

In November Burberry warned this year’s revenue target may be out of reach as sales were barely growing. This meant its profit would probably come in at the lower end of its guided range, which started at £552 million. On Friday it showed that trading was even more difficult than expected, led by a 15 percent slump of revenue from the Americas.

Chief executive officer Jonathan Akeroyd’s efforts to jumpstart the brand have been stymied amid weak demand for luxury goods. Akeroyd has appointed designer Daniel Lee to reinvigorate the company’s popularity, but the efforts have yet to bear fruit.

Consumers have had a muted reaction to Lee’s creations, UBS analyst Zuzanna Pusz wrote in a note in early October, adding there’s a lack of hype on social media for the brand.

In the past few quarters, shoppers worldwide have been balking at higher prices from luxury brands, signalling that inflation is also hitting well-heeled shoppers, especially so-called aspirational customers who tend to buy items at the lowest price levels.

In November, Richemont reported a surprise decline in earnings as revenue from luxury watches unexpectedly fell and high-end consumers reined in spending.

Analysts at UBS Group AG said this month they expect a weak luxury-goods earnings season, advising investors to stick to more defensive stocks such as Hermes International SCA and avoid Burberry, as its turnaround is not yet proven.

Burberry’s wholesale revenue has been suffering as its price points are too high for some customers. The retailer is also very reliant on Chinese shoppers and it has taken time for mainland tourists to start returning to Europe since the pandemic. In its home market of the UK, Burberry, like other luxury rivals, has been affected by the UK government’s decision to scrap VAT-free shopping for travellers, meaning some tourists are now buying their high-end goods in places like Paris and Milan rather than London.

By Thomas Mulier

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