Burberry has seen a drop in its second half revenue as it warned of “challenging” market conditions in the year ahead.
The luxury fashion house reported a 1% fall in its third and fourth quarters. Burberry noted that its weakening appeal to US wholesale customers and changes in spending habits contributed to its recent results.
Burberry’s retail business fell by 5% in like-for-likes in the fourth quarter ending 31 March. Further, a decrease in Chinese spending, which generally accounts for 40% of Burberry’s sales, also effected the retailer. Sales fell by more than 20% in Hong Kong for the third consecutive quarter.
Analysts predict a 10% decline in sales its current financial year, with full year revenues coming out as lower than expected.
“In an external environment that remains challenging for luxury, we continue to focus on reducing discretionary costs and are making good progress with developing enhanced future productivity and efficiency plans,” said Chief Executive Christopher Bailey in a statement accompanying the results.
Similarly LVMH reported struggling sales, suggesting difficulty among luxury retailers. Nonetheless, Burberry expect its total sales to grow as a result of new store openings this year.