British luxury goods maker Burberry has reported a slowdown in underlying first-quarter retail revenue growth. As Hayley Platt reports, it was held back by a further deterioration of the high margin Hong Kong market.
Its trademark trenchcoat is sold in more than 200 stores around the world. But Burberry's underlying first quarter results point to a slowdown in sales. Retail revenues in the three months to the end of June were up 8 percent to just over 400 million pounds, narrowly missing forecasts. That compares to growth of 13 percent six months earlier. Hong Kong has been a particular problem, thanks to pro-democracy protests last year. The market there accounts for around 10 percent of Burberry's retail and wholesale sales. The wider Asia pacific region also disappointed, but sales in mainland China grew slightly, despite a slowing economy. Bill Blain is from Mint Partners. SOUNDBITE: Bill Blain, Market Strategist, Mint Partners, saying (English): "They simply aren't creating enough jobs to feed the younger middle classes coming onto the job market with something to do. As a result I think you're likely to see a scale back in spending expectations, so less spending on bling and more putting it in the bank." The Chinese government's clamp down on corruption. And a meltdown of the Shanghai stock exchange are also weighing on the luxury market. SOUNDBITE: Bill Blain, Market Strategist, Mint Partners, saying (English): "Anything that impacts the demand of the Chinese middle classes for western products potentially has a knock on effect." Foreign exchange fluctuations are also a problem. In May Burberry cut its 2015-16 profit guidance as a result. It's left that unchanged this time. But shares still fell 4 % on the results - on top of a 9 percent drop over the past three months. That could mean more criticism at Thursday's AGM over the pay award to CEO Christopher Bailey. Last year more than half of voters opposed his near £8 million package.