Burberry's Stock Falls - Company Cancels Dividend and Issues Weak Outlook

Burberry Group Plc, a British luxury brand, saw its shares fall more than 2% on Thursday after the company announced the cancellation of its dividend and issued a weaker-than-expected outlook.

Burberry stated that it will not pay a dividend to shareholders, while analysts had expected a payment of 9 pence. The company also noted that in the first half of fiscal year 2027, wholesale sales growth will be in the low single-digit percentage range, which is below market expectations.

Furthermore, the company warned that changes in exchange rates will have a negative impact of approximately £10 million on revenue and profit—nearly three times more than analysts had anticipated.

In the fourth quarter, sales in the Europe, Middle East, India, and Africa region declined by 2%. The company attributed this to a reduction in tourist flows and the ongoing conflict in the Middle East.

Despite the weak outlook, Burberry's annual results exceeded market expectations. Adjusted operating profit increased to £160 million, compared to only £26 million a year earlier. Profit margins also improved significantly.

The company's fourth-quarter comparable store sales grew 5%, marking the fifth consecutive quarter of improving growth rates. Particularly strong results were recorded in China and the United States, where sales increased by 10%.

Citi analysts called the company's results "delivery on all material objectives" and noted that the improvement in full-price sales is a significant positive factor.

Burberry also announced that the company's chairman, Gerry Murphy, will step down in November 2026 and will be replaced by William Jackson.