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Burberry results confirm fears of slowdown Thursday, 11th October 2012
Photo credit: My Retail Media
British fashion house Burberry on Thursday confirmed what many investors had feared, as retail sales growth saw a sharp slowdown in the second quarter, with demanding easing in the UK and China.
Sales at stores open a year rose 1 per cent in the three months to 30 September, compared with first quarter growth of 6 per cent.
"In a more challenging external environment, footfall declined but brand momentum remained strong, particularly with our higher spending luxury consumer," said chief executive Angela Ahrendts.
As one of the only luxury brands to continue to report growth in sales throughout the UK’s double dip recession and eurozone crisis, the results confirm that not even Burberry is safe from a slowdown in China and emerging markets.
"The fears surrounding Burberry's high profile profit warning last month will not have dissipated on the back of this trading update.” Jaana Jatyri, chief executive of fashion forecasting company Trendstop.com said in light of the results.
"Naturally, the longer the global economic crisis goes on, and the deeper it affects emerging markets in particular, the more exposed Burberry will be.
“The emerging markets have proved to be a double-edged sword for Burberry. Yes, there is money in the emerging markets but newly acquired customers can also be more fickle than those in the established territories where wealth is arguably more stable. The fact that Germany and France have proved particularly robust for Burberry underlines this fact. If Burberry can cope with the current turbulence, it will be tremendously well positioned in the medium to long-term.” Jatyri added.
Burberry on Thursday said it expects retail selling space to increase by 14 per cent for the second half, with underlying wholesale revenue to remain mostly unchanged year-on-year.