Hong Kong protests could leave £100m dent on Burberry sales

Burberry pretax profits down 62% for first half
The business said its first half year had been “underpinned by strong cash and cost discipline".
// Analysts predict Burberry will endure £100m sales blow from Hong Kong protests
// Burberry has 10 shops in Hong Kong & 8% of its total sales derive from there

Burberry is bracing for a potential £100 million dent on sales in Hong Kong as a result of short-term impact from the ongoing protests, industry analysts have warned.

Analysts at Jefferies told The Telegraph that the fashion retailer’s Hong Kong sales were likely to be £100 million lower for the year to April 2020.

However, it said it could recoup around 50 per cent of these losses from its sales across Europe and the rest of the Asia-Pacific region.

Hong Kong is often regarded as one of the world’s top five luxury shopping destinations, drawing in visitors from mainland China and beyond, and is a crucial market for Burberry.


According to Bernstein analysts, Hong Kong brings in between five and 10 per cent of the estimated $285 billion annual global sales of luxury goods.

Burberry has 10 stores in Hong Kong, which generates around eight per cent of its total sales.

Jefferies analyst Flavio Cereda said the British fashion house’s ready-to-wear ranges meant it was already under pressure to sell seasonal stock than some of its luxury competitors.

“The problem with having ready-to-wear in stores which is not shifting is that the stock is seasonal so it’s a pressing problem because it will hit markdowns pretty soon,” Cereda told The Telegraph.

“You’ve got two issues; you’ve got to divert deliveries and then you’ve got to think about what to do with all the stock in the stores because it’s not selling.

“The simple solution is don’t deliver stuff to Hong Kong any more, there’s no point.

“Or if you’re going to deliver 500 jackets, then deliver 50 instead and ship the rest of them off to mainland China.”

Burberry is not provided a comment.

The news comes as Bernstein data last week revealed that retail sales in Hong Kong fell 23 per cent in August year-on-year – the biggest decline on record.

Visitor arrivals also saw a drop of 39 per cent, as the amount of of mainland Chinese tourists travelling to Hong Kong fell by 42 per cent.

Meanwhile, approximately 30 shopping centres have closed since the anti-government protests started several months ago.

The closures have occurred around the same time as the annual Golden Week holiday – which normally is one of the busiest times for retailers in the city.

Retailers have also been negotiating with landlords in an attempt to obtain lower rents in the wake of the protests.

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