Burberry Shares Fall as European Tourist Slowdown Overshadows Sales Growth

Burberry (LSE:BRBY) shares fell on Friday despite the British luxury brand reporting first-quarter sales growth that met analyst expectations. Investor sentiment was dampened by a sales decline in Europe, which the company attributed to a drop in tourist spending linked to the ongoing conflict in the Middle East.

Sales Meet Forecasts, But Europe Falters

In a first-quarter trading update, Burberry announced a 5% increase in comparable retail sales for the 13 weeks to late June, a figure that was in line with market forecasts. Total retail revenue reached £455 million, also up 5% year-over-year at reported exchange rates.

Performance varied significantly by region, with strong growth in some key markets overshadowed by weakness in Europe.

• Americas: +12%
• Greater China: +9%, supported by demand from Gen Z consumers.
• EMEIA (Europe, Middle East, India, and Africa): -3%

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The company explicitly cited reduced tourist activity in Europe, linked to the Middle East conflict, as the primary reason for the contraction in the EMEIA region. The firm noted this has been a persistent headwind for several recent quarters.

Market Reaction and Outlook

With the 5% sales growth widely anticipated by analysts, the results offered little room for a positive surprise. Instead, the weakness in the EMEIA region became a focal point for investors, raising concerns about the impact of geopolitical instability on luxury spending.

Pressure on Burberry's stock was compounded by a broader risk-off sentiment in global markets that weighed on consumer discretionary names. The results come as CEO Joshua Schulman's multi-year turnaround plan for the brand remains under close scrutiny from the market. Following the update, Burberry shares fell by as much as 4.7% to 1,068p.