Burberry reports a slowdown in underlying first quarter retail revenue growth, held back by a further deterioration of the Hong Kong market. The British luxury company said it posted retail revenue in the three months to June 30 up 8 percent to GBP 407 million ($637 million).
That compared to analysts’ average forecast of 414 million pounds and was below the growth of 13 percent recorded in the second half of Burberry’s 2014-15 year. Comparable store sales growth was 6 percent, in line with analysts’ consensus forecast but down from 9 percent in the second half.
Burberry noted that its Asia Pacific region experienced a low single-digit percentage comparable sales decline, impacted by the “continued challenging environment” in Hong Kong, which weakened further to a double-digit percentage decline in comparable sales. In mainland China comparable sales grew by a low single-digit percentage and Japan saw exceptional growth, albeit off a small base.
The Hong Kong market, which represents about 10 percent of Burberry’s total retail/wholesale sales, has deteriorated since pro-democracy protests gathered pace last year. The firm said the slowdown in Asia Pacific was more than offset by growth elsewhere.
Its Europe, Middle East, India and Africa (EMEIA) division saw double-digit percentage comparable sales growth, with strength from the traveling luxury customer in France, Italy and Spain in particular, while its Americas region delivered high single-digit percentage comparable sales growth.
In May Burberry cut profit guidance for the 2015-16 year, hurt by foreign exchange movements and subdued demand in Hong Kong. Its shares have fallen by 9 percent over the last three months.
On Wednesday it left most of its full-year guidance unchanged.
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