Luxury spending was booming during the COVID-19 pandemic, but the tide has since turned. One of Europe’s hottest industries is seeing sales fall, one big brand after another—and British brand Burberry is the latest of them.
The company said Thursday it might fall short on its sales target for the current financial year as demand for high-end goods contracts. In six months to the end of September, Burberry clocked in a sales growth of 4% to £1.4 billion (about $1.7 billion). However, the coat-maker’s operating profit plunged 15% for the same period. Store sales were sharply down in the Americas, while it stayed strong in the Asia Pacific region.
Given the slowdown in its business, Burberry noted that it was “unlikely to achieve” its earlier guidance for full-year earnings figures and that its operating profit would be on the lower end of the target range.
“The slowdown in luxury demand globally is having an impact on current trading. If the weaker demand continues, we are unlikely to achieve our previously stated revenue guidance for FY24,” the company said in its earnings release.
Burberry’s shares fell over 9% as of 11 a.m. GMT on Thursday following the announcement.
The luxury label’s CEO Jonathan Akeroyd pointed to inflation and elevated cost of living as the reasons for why shoppers are pulling back on spending, according to the Financial Times.
“This challenging macro environment is coming across from all regions. I think this has been something that is quite unique because historically, you get softness in one region, you’ll be able to pick it up in the other,” Akeroyd said during a press call.
Burberry’s lackluster sales follow a slew of luxury brands that have seen their sales growth either fall or ease in recent months as macroeconomic volatility weighs heavy on shoppers. Its European rivals, including French behemoths LVMH and Kering, have watched sales disappoint for the last quarter, underscoring the weakness in spending amid rich shoppers.
It isn’t just apparel or bag that people are buying less of—high-end watch brands like Richemont’s Cartier have also taken a hit in the recent quarter.
“Traditionally the wealthy clientele which shop for expensive clothes and accessories are seen as being insulated from the impact of higher borrowing costs and rising prices but apparently they are feeling some of the pain,” said AJ Bell’s investment director Russ Mould in a note sent to Fortune.
As the luxury slump intensifies, only a few players have escaped unscathed so far, such as Birkin bag-maker Hermès.
The brand’s iconic “Burberry Check”—which it has used to design bags, coats and more—has been its signature print from the 1960s onwards. When Akeroyd became CEO last year, the group’s strategy was to channelize its “Britishness” as a way to grow its business and eventually hit £5 billion in sales. Burberry hired British designer Daniel Lee, who recently unveiled his first collection for the brand, as part of the strategy.
The company has had its share of hurdles beyond slowing global sales. Burberry’s chairman Gerry Murphy criticized Prime Minister Rishi Sunak for making Britain the “least attractive” destination for shopping in Europe, after Sunak struck down VAT refunds for tourists.
But that hasn’t let Burberry shift its gaze from its bigger target. Akeroyd said even with macroeconomic uncertainty, he remains confident about Burberry’s path forward.
“We made good progress against our strategic goals, executing our priorities at pace,” he said in a statement. “While the macroeconomic environment has become more challenging recently, we are confident in our strategy to realise our potential as the modern British luxury brand, and we remain committed to achieving our medium and long-term targets.”
Burberry didn’t immediately return Fortune’s request for comment.