Burberry reports sharp slowdown in US sales
BRITISH LUXURY brand Burberry Group reported a sharp slowdown in US sales growth as it chose to cut back supplies for department stores to sell through their discount outlets, knocking its high-flying shares.
The 156-year-old seller of raincoats and leather goods, known for its camel, red and black check pattern, said it wanted to focus on more profitable full-price sales and was seeing no overall moderation in demand.
The group met forecasts with a 22 per cent rise in third-quarter revenue. Some analysts said the figures were flattered by a pulling forward of wholesale orders and that the firm’s full-year guidance implied little growth in fourth-quarter wholesale sales.
“Nothing wrong with the overall numbers. However the poor performance in the US and the weak 4Q guidance may worry the market,” Liberum analysts said.
Burberry shares were down 1.9 per cent at 1,275p in early morning trade, the biggest fall at that time by a European blue chip stock, but rallied to close at 1,301p, a gain of 1p.
Luxury goods shares have wobbled in recent months amid signs of a slowdown in economic growth in China, the engine of recent strong demand for high-end goods, and fears the euro zone debt crisis could drag the world back into recession.
Jeweller Tiffany and watchmaker Swatch last week warned of slower growth.
Burberry’s shares, which rocketed about 10 times in value from November 2008 to July 2011, are trading well below their peak of 1,610p, but also clear of their October low of 1,034p.
Burberry said it made £574 million of revenue in the three months to December 31st, just above analysts’ average forecast of £569 million in a Reuters poll.
Finance chief Stacey Cartwright said the slowdown in growth from 29 per cent in the first half was due to tougher comparable figures the year before and demand from Asian shoppers and tourists in particular remained strong.
Sales in the Asia-Pacific region jumped 39 per cent to £210 million, accounting for the largest proportion of the total, while strong demand from travellers drove sales in major cities such as London, Paris and Hong Kong. – (Reuters)