Burberry's share price drops as luxury brand warns on outlook

Catherine Neilan
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Burberry Brings London To Shanghai - Inside
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Burberry's share price fell more than six per cent this morning after revealing sales had dipped in the second half, while warning about challenges coming in the full year ahead.

The figures

Total revenue at the luxury brand fell one per cent in the six months to 31 March, down to £1.4bn. Comparable sales dropped two per cent, with the fourth quarter taking the brunt of the bad performance, down five per cent.

Burberry said it continued to see growth in China, Korea and Japan but said sales had slowed in Continental Europe and US domestic demand was "uneven".

Why it's interesting

Burberry management has warned that the outlook for the full year ahead is "challenging", saying it expects wholesale to be down around 10 per cent in the first half. It also warned that cost inflation pressures "persist", although said this would be partly offset by gains in foreign exchange.

What Burberry said

Christopher Bailey, chief creative officer and chief executive, said: "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.

"Meanwhile, brand momentum is strong, digital continued to outperform in the half and innovation in new products is resonating well with our customers."

In short

Burberry may be forging ahead with internal enhancements, but the warning over the outlook for the luxury market is concerning.

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