Fashion darling Burberry plunges as it unveils shock profits warning
Laura Chesters
Laura Chesters is digital, consumer and luxury goods reporter at The London Evening Standard, i, The Independent and The Independent on Sunday.
Wednesday 12 September 2012
Related articles
It's the hottest ticket at London Fashion Week, and a brand that has recovered from its "chavvy" connotations to become a global powerhouse in the world of luxury style. So the stock market – and the fashion world – was understandably shocked when Burberry issued a profit warning yesterday, sending its shares plunging 21 per cent.
In a surprise update, the group revealed it had been hit by a slowdown in spending across the world.
The darling of the fashion scene had once enjoyed sales growth in double digits, but yesterday it reported that like-for-like sales ground to a halt in the 10 weeks to 8 September, and its full year profits would be at the bottom end of expectations at about £407m.
Retail sales, including from new stores, were up 6 per cent. The slowdown compares with a strong first quarter, when retail sales grew by 14 per cent.
The chief financial officer Stacey Cartwright said: "In the last two weeks there has been a global slowdown. We have seen this across the board in Asia, the US, Europe and the UK."
Luca Solca, a luxury brands expert at CA Chevreux, blamed Burberry's reliance on very high-end clothing rather than accessories such as handbags. He said: "Apparel – on which Burberry is more dependent than other mega-brands – is softer. In difficult times consumers prefer leather goods and hard luxury accessories as they are more visible and work better as status symbols."
Ms Cartwright said: "The level of growth has slowed but for most people 6 per cent growth would be very good."
Despite its issues, the brand is gearing up for London Fashion Week, where it will present its Burberry Prorsum womenswear spring/summer show on Monday.
Burberry's shares crashed 287p to 1,088p.
-
British aid worker sisters 'raped and kidnapped' crossing Libya
-
Richard Griffiths: An actor with a touch of genius about him
-
Ed Miliband: Politics is far too important to be left to the politicians
-
'My beloved Uncle Monty': Tributes pour in for Withnail And I actor Richard Griffiths following death at 65
-
Google Street View sends cameras into Namie, an abandoned town in Fukushima where once 21,000 people lived
Win a luxury Durham break and £500 worth of outdoor gear
Discover Durham's great outdoors.
Win tickets to Sunken Garden
10 pairs of tickets to Michel van der Aa’s fabulous new multimedia mystery opera to be won
Win a relaxing spa break in a luxury York hotel
Win an epicurean two-night break at a luxury York country house hotel, worth nearly £800.
Win a plane for 50 people to Stockholm
As British Airways celebrate 10 years flying from London City Airport. Plus watch the exclusive Simon Calder video.
Win a tailor-made trip to Graubünden
Graubünden: Switzerland’s No. 1 holiday destination. Discover Swiss alpine holidays - your way.
Enter the latest Independent competitions
Win anything from gadgets to five-star holidays on our competitions and offers page.
Business videos from commercial thought leaders
Watch the best in the business world give their insights into the world of business.
iJobs Money & Business
Career Opportunity With SThree in Recruitment
£18000 - £23000 per annum + commission and benefits: SThree: With 26 years exp...
Career Opportunity in Recruitment in Dublin
£16904.24 - £22048.90 per annum + Commission and benefits: SThree: With 26 yea...
Career Opportunity in Recruitment with SThree
£18000 - £23000 per annum + commission and benefits: SThree: With 26 years exp...
(Trainee) Recruitment Consultant - London
£20000 - £27000 per annum + uncapped commission: SThree: An incredible opportu...
Comments