Burbery shares have fallen six percent after the British luxury fashion brand said tough conditions would hit profit in the year ahead. As Hayley Platt reports a drop in tourist spending in continental Europe and weak demand in Hong Kong has depressed sales in recent months.
Burberry is one of Britain's best exports. But demand for the iconic brand has been falling. Retail sales fell 5 percent over the last three months. Revenue for the six months to the end of March were down 1 percent to 1.41 billion pounds. Burberry blames fewer tourists visiting Europe, especially from China. But sales in Hong Kong weren't great either - falling 20 percent for the third successive quarter. The news sent shares down 6 per cent. (SOUNDBITE) (English) COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, PETER DIXON, SAYING: "I think that as the crackdown on the Chinese purchasers of luxury goods continues, particularly in the home market then of course the weakness of the Chinese economy will dissuade more tourists then yes I suspect it's a problem which is going to continue to impact upon Burberry and indeed a lot of other members of the luxury goods sector for some time to come." Christopher Bailey's dual role as CEO and Creative Director has been criticised by some shareholders. But Burberry isn't the only luxury goods firm suffering from the economic slowdown. Sales at LVMH missed forecasts on Monday. While profits at Prada lost 27 percent in the quarter. (SOUNDBITE) (English) COMMERZBANK, GLOBAL FINANCIAL ECONOMIST, PETER DIXON, SAYING: "The global forces operating on the sector are such that it will continue to struggle, certainly through this year and who knows what will happen over a horizon longer than six months." Burberry says it isn't optimistic about the rest of the year either. It will continue to reduce costs and improve productivity. And expects full year profits to be at the bottom end of forecasts at around 405 million pounds.