Ahead of Burberry half year results, new research reveals high net worth individuals are increasingly cutting spending on luxury goods
1 November 2024
Latest research from financial planning firm Saltus shows 17% of high net worth individuals have cut down on luxury items and designer clothes specifically
Burberry (BRBY.L) reports its first half results this week (Thursday 14 November) and is expected to report a one-fifth drop in sales, according to analysts1.
Burberry is the latest in a list of luxury brands reporting a downturn in profits; Hugo Boss2 last week reported a 7% drop in quarterly earnings, while in October, LVMH Moët Hennessy Louis Vuitton3, reported a 2% decline – rising to 6% for its fashion and leather goods revenue – while Swiss brand, Swatch Group, saw profits halve during its latest financial year4.
The struggles being experienced by companies operating in the luxury sector is supported by data from wealth management firm Saltus, which surveyed 2,000 British high net worth individuals (HNWIs) – those with assets of more than £250,000 – as part of its latest Saltus Wealth Index Report.
According to Saltus’ report, 16% of high net worth respondents have cut down on their personal spending as a result of the rising cost of living and the impact on their lifestyles, with 17% saying they have cut down on luxury items and designer clothes specifically.
16% say they have cut down on travel and holidays, and are spending less on trips and entertainment, such as visits to the theatre, opera or cinema. One in ten (11%) say they have cut down on eating out, while the same 11% say they have switched to a cheaper supermarket.
In fact, just 7% of HNWIs say the current high rate/high price environment has not impacted their lifestyle – down from 9% six months previously.
Mike Stimpson, Partner at Saltus, said: “We know from our research that many high net worth individuals are making significant adjustments to their spending in response to the current economic landscape. With rising essential costs, including mortgage payments and family support – with more than eight in ten having provided financial support to their adult children, grandchildren or both in the past 12 months – HNWIs are prioritising their expenditure more cautiously.
“We would expect that this would translate into impacting discretionary spending, including luxury brands such as Burberry. Well run companies will make adjustments to accommodate this new environment.”