Burberry hit by slowdown in Asia sales

Luxury goods maker Burberry saw its shares slump yesterday after it said its six-month revenue growth slowed to a trickle, due largely to weaker sales in Hong Kong and mainland China.
The London-based company said revenue in the six months ended Sept. 30 edged up less than 1 percent from a year earlier, to 1.105 billion pounds (USD1.7 billion). The report raised concerns among investors, who pushed the shares down 12.6 percent to 1,240 pence in mid-morning trading.
Burberry said it expects growth to accelerate in the second half and that pretax profit for the fiscal year should be “broadly in line with” the average analysts’ estimate of 445 million pounds.
Chief Executive Christopher Bailey said customer demand for luxury goods declined in key markets as “external conditions” worsened. “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,” he said.
Slowing growth in China has hurt Burberry and its rivals who counted on rising wealth in the world’s second biggest economy to drive demand for luxury goods. China’s gross domestic product grew 7 percent in the second quarter, as the government worked to shift the economy toward self-sustaining domestic consumption and away from exports and investment. Danica Kirka, London, AP