Burberry chilled by rockier road for high end fashionComments Off on Burberry chilled by rockier road for high end fashion
Chinese shoppers are increasingly shunning Burberry on shopping jaunts to London and Paris, triggering tougher times for the high-end fashion house.
The Brit-based firm, led by chief executive Chris Bailey, chilled investors by warning of a “challenging” environment for high end fashion due a slowdown in continental European sales.
Underlying half year revenues fell 1% to £1.4 billion, led lower by the expiry of Burberry licenses in Japan, which contributed to a 50% drop in licensing revenues overall.
The group said sales in continental Europe slowed during the fourth quarter as sales to travelling luxury customers from place like China fell year on year.
The outlook was also bleak after it warned full year profits would be at the lower end of expectations due to a predicted fall in its wholesale business.
It is currently planning to overhaul how it runs the business to reduce costs.
“In an external environment that remains challenging for luxury, we continue to focus on reducing discretionary costs and are making good progress with developing enhanced future productivity and efficiency plans,” Bailey said.
On the fashion front, scarves, ponchos and runway rucksacks were the most popular items for fashion conscious shoppers.
Closely watched demand for Burberry in mainland China, a key driver of the company’s performance over the past few years, remained strong.
Comparable sales overall were down by 2%.