Burberry reports weaker-than-expected sales and cautions on earnings

Stock falls most in six months, in poor week for luxury industry

Analysts are questioning the merit of Burberry’s chief also being its top designer. Photograph: Reuters

Analysts are questioning the merit of Burberry’s chief also being its top designer. Photograph: Reuters

 

Burberry Group  reported weaker-than-expected sales and predicted earnings this year at the low end of estimates, sending its stock down the most in six months and capping a dismal week for the luxury-goods industry.

In a business climate that chief executive Christopher Bailey described as “challenging", sales in Hong Kong fell more than 20 per cent for a third straight quarter. Tourists are spending less in Europe following terrorist attacks and demand remains uneven in the US, the company said.

The shares slid as much as 8.1 per cent.

Burberry’s comments add to a slew of glum news for the luxury-goods industry after LVMH’s revenue growth missed estimates and Prada posted its lowest annual profit in five years.

 The latest setback adds to pressure on Mr Bailey, with analysts including Luca Solca at Exane BNP Paribas questioning whether he can lead the company effectively, while also being head designer.

Burberry’s outlook is “likely to be taken negatively for the whole luxury sector,” said Zuzanna Pusz, an analyst at Berenberg in London.

Burberry shares were down 7.5 per cent to 1,244 pence at 9:53am in London, the steepest drop since October

Bloomberg