Burberry profits drop after Chinese economy crash

Published: 15-Oct-2015

Second half results hit by "challenging environment"

Burberry has blamed "an increasingly challenging environment for luxury customers" for disappointing financial results for the fist quarter of 2015.

The brand said that the turndown had particularly affected its Chinese customers and reported a mid single-digit percentage decline in retail revenue in the Asia Pacific region, with revenue in Hong Kong decelerating further in the second quarter.

However, the brand said it was taking a number of steps to limit the impact on 2016 profit including its expanded beauty distribution with Sephora and Shiseido in Japan. The brand also said that it would had reallocated marketing spend ahead of the festive trading period.

Christopher Bailey, Chief Creative and Chief Executive Officer of Burberry, said in an official statement: "The external environment became more challenging during the half, affecting luxury consumer demand in some of our key markets. In response, we have intensified our focus on driving sales and productivity, while taking swift action on discretionary costs. While mindful of this external volatility, our plans for the festive season position us well to return to a more positive sales trend in the all-important second half. Looking further ahead, we maintain our focus on - and confidence in - the long-term growth opportunities for our business across channels, regions and product categories."

Burberry anticipated that profits before tax for 2016 would be in line with analysts who recently updated their forecasts. Shares in the brand have dropped 12% in response.

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