A sharp sales slowdown in China and Hong Kong led Britain's Burberry to miss forecasts for first-half sales growth and warn of an increasingly challenging environment for luxury sales. As Tim Graham reports, it's a growing trend.
Tough times on the high street for Burberry. The British retailer issuing a downbeat report card on its performance, confirming it's missed first-half sales targets. Retail revenue rose two percent, to more than 770 million pounds (£774mln) in the six months to October. A sharp slowdown from first-quarter growth of 8 percent, and 44 million below below analysts' average forecasts. Burberry is blaming a sharp slowdown in Hong Kong and China... as its rival LVMH did earlier in the week, after summer sales were down for its flagship Louis Vuitton brand. Gerren O'Neill is with Thames Capital Markets. (SOUNDBITE) (English) THAMES CAPITAL MARKETS SENIOR TRADER, GERREN O'NEILL, SAYING: "We've had an underperform rating on the sector throughout the course of the year, so it is not unexpected to us. You know, if we look at the declining sales across LVMH, Switzerland's Rochemont. Look at the import figures for China at 17.7 percent decline, so that's fairly reflective in terms of the news we have heard from Burberry at the moment." Burberry shares tumbled up to 13 percent on the profit outlook. But it still expects to meet forecasts for a pre-tax profit of 445 million pounds. The plan now is to control costs, in the hope of softening the blow to the company's year-end balance sheet.