Key week for Burberry amid China worries

Elizabeth Fournier
INVESTORS will be eagerly awaiting first half figures from Burberry this Wednesday, as the luxury fashion house seeks to reassure that its expansion remains on track despite uncertainty in key Asian markets.

Amid general market turmoil and fears over a slowdown in the Chinese economy, which accounts for 15 per cent of the company’s retail revenues, Burberry shares have dropped 30 per cent since hitting a high of £16 in July.

Chief executive Angela Ahrendts struck a bullish note when she addressed a conference in New York last week, reassuring investors that Chinese sales were “consistent”, and insisting that a general slowdown would not necessarily hit the high-end retail markets.

“Analysts have taken down their overall growth rates for China, what they didn’t do is break out the luxury growth targets,” she said.

Forecasts for this week’s sales figures remain upbeat, with Burberry expected to reaffirm its commitment to international growth despite the recent sell off.

“Despite the recent sell off in Burberry shares and the sector generally driven by macro concerns over a potential global slowdown and a hard China landing, we expect Burberry to report strong Q2 trading after a faultless Q1 performance,” said Kate Calvert, analyst at Seymour Pierce.

Last month, Italian fashion house Prada posted a 74 per cent rise in first-half profit, three months after it made its debut on the Hong Kong stock exchange.