“It would not be the first time we have seen a one-quarter blip at Burberry”, JP Morgan Cazenove analyst Melanie Flouquet said.
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But it’s hardly surprising the group has chose to focus it’s efforts away from China and more into the Western world – sales grew in the United States and comparable sales growth in places like Italy, France and Spain jumped by over 20%.
Luxury fashion house Burberry became a fashion fail for a host of brokers this morning, as they slashed the stock’s target price a day after the group’s half-year sales fell short of expectations.
Burberry said revenue had slowed over the past half year with weak sales in China and Hong Kong.
Burberry said it expects adjusted profit before tax for fiscal 2016 to between GBP434 million to GBP461 million.
For the first half of 2015, Burberry reported sales of £1.1 billion (about $1.7 billion), which is a two percent increase year-over-year.
Stocks have been hit in recent days on disappointing trade and inflation figures from China. Separately, wealthier Chinese consumers are increasingly traveling to Japan to buy luxury goods, a country that now makes up just 2% of Burberry’s wholesale and retail revenue.
The firm saw a mid single-digit percentage decline in comparable store sales in the Asia Pacific region, which includes Hong Kong and China.
“We believe the financial community may not have the same degree of confidence in the current chief executive as in previous management teams”, analysts said. The company announced it would cut bonuses. Around 60% of sales in its EMEIA (Europe, middle east, India and Africa) are from tourists, who helped push revenues from the region up by “double digits” (nothing like being a little vague).
“Burberry is in an interesting position as a result of its global expansion with exposure to a few of the most volatile currencies out there; everyone is focused on the yuan but the moves in the Russian rouble, South Korean won and the euro will have made trading conditions very hard”.
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The range is still growing, with Beauty a big push at the moment, initially through Fragrances, but backed up by an increasing make-up offer, creating scope for mini-stores in niche locations, to complement the core fashion-led stores. Revenue from the beauty division climbed to GBP82 million from GBP79 million a year earlier.
