Credit: Burberry

Burberry shares fall 9% as the Chinese tighten their belts

Retail revenue at the fashion firm rises a mere 2% as Chinese consumers turn away from luxury purchases.

by Adam Gale
Last Updated: 19 Oct 2015

Shares in luxury fashion house Burberry fell 9% this morning, after it reported a 2% rise in underlying retail revenues to £774m for the six months to the end of September. Trading at 1,292p at lunchtime, they have lost a third of their value since February, as new rules against luxury gift giving and a general slowdown hit demand in the company’s important Chinese market.

Not all firms can be as fortunate as Unilever, which emerged unscathed from a summer of Chinese stock market volatility and slowing growth. Chinese consumers scared of a hard landing may not be willing to give up their shampoo, but they can live without their tartan-lined trench-coats. Burberry said there was a ‘mid single-digit’ percentage decline in retail sales in Asia Pacific over the period.

To an extent, this is due to rules against luxury gift giving within China itself, which is seeing consumers make their purchases on holiday instead. 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). Overall group revenues including wholesale were level at £1.1bn.

Chief executive and creative officer Christopher Bailey said the ‘challenging’ environment wouldn’t affect the £434-461m full-year profit range analysts gave recently.

‘We have intensified our focus on driving sales and productivity, while taking swift action on discretionary costs,’ he said. ‘We maintain our focus on - and confidence in - the long-term growth opportunities for our business across channels, regions and product categories.’

Investors, spooked by fears that China’s economic slowdown is only just beginning, don’t seem to share that confidence.


Find this article useful?

Get more great articles like this in your inbox every lunchtime

“You literally have to rewrite your job description”

One minute briefing: In hard times, your network becomes more important than ever, says Prezi...

5 bad habits to avoid when leading remotely

In a crisis, it can be hard to recognise when you've taken your eye off...

A top-level guide to scenario planning

COVID creates unprecedented uncertainty, but there are tried and tested ways of preparing for an...

Is it favouritism to protect an employee no one likes?

The Dominic Cummings affair shows the dangers of double standards, but it’s also true that...

Masterclass: Communicating in a crisis

In this video, Moneypenny CEO Joanna Swash and Hill+Knowlton Strategies UK CEO Simon Whitehead discuss...

Remote working forever? No thanks

EKM's CEO Antony Chesworth has had no problems working from home, but he has no...