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Burberry sales hit by China’s economic slowdown

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Luxury goods purveyor Burberry has said it will take “accelerated actions” to control costs and minimise the effects of weaker trading conditions in Asia on profit for its 2015-16 year. 

An unprecedented sales slowdown in China and Hong Kong has forced the British label to miss expectations for first-half sales growth, and in a trading update this morning the company cautioned on how increasingly challenging the market is for luxury sales. Consumer confidence in China has been lowered since the country’s economy weakened, currency devalued and stock market plunged. This causes problems for Burberry because Chinese customers make up around 30-40% of Burberry’s global revenue. 

"The external environment became more challenging during the half, affecting luxury consumer demand in some of our key markets,” said Christopher Bailey, Burberry's Chief Exec and Chief Creative Officer. 

“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." 

Retail revenue at the 159-year-old trench-coat maker grew 2% to £774m pounds in the six months to 30 September, below forecasts, but the retailer did see stronger growth in the Europe, Middle East, India and Africa region and the Americas. 

Published on Thursday 15 October by Veebs Sabharwal

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