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Burberry's 170th Anniversary Hit by Middle East Conflict
8 Mar
Summary
- Burberry's 170th anniversary campaign faces disruption from Middle East conflict.
- Shares fell nearly 6% last week as luxury sector declined.
- Middle East accounts for 3% of Burberry sales, less than rivals.
As Burberry celebrates its 170th anniversary, its strategy to revive the brand with a focus on 'Britishness' and its iconic trench coats faces headwinds. A new ad campaign featuring stars like Kate Moss is launching, but escalating conflict in the Middle East poses a significant risk to its recovery efforts.
Last week, Burberry shares declined by almost 6%, and the broader Stoxx Europe Luxury 10 Index fell 8% amid the eruption of hostilities. The Middle East is a crucial market for luxury goods, attracting wealthy consumers in the Gulf. This region had been a bright spot for the struggling luxury sector, especially as other markets faced confidence slumps.
Analysts express concern that a prolonged conflict could impact global oil and gas supplies, potentially increasing the likelihood of a worldwide recession, which would dampen demand for discretionary luxury items. However, Burberry appears less exposed than some rivals; the Middle East constitutes only 3% of its total sales, according to Morgan Stanley.
