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Published
Sep 11, 2012
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Burberry shares slump almost 18% on shock profit warning

By
AFP
Published
Sep 11, 2012

LONDON - Shares in luxury clothing and accessories group Burberry tumbled by nearly 18 percent on Tuesday after the firm issued a shock profits warning.

The fashion group announced in a statement that like-for-like sales, stripping out the impact of new floor space, ground to a halt in the 10 weeks to September 8 -- and have started to fall.



Burberry store


As a result, Burberry warned that its annual profits would be at the bottom end of expectations.

In reaction, the group's share price plunged 17.67 percent to 1,133.92 pence in early morning deals on London's FTSE 100 index of leading companies, which was down 0.22 percent in value.

"Against strong comparatives last year, retail sales growth at constant exchange rates was 6.0 percent in the 10 weeks to 8 September 2012," it said in a trading update.

"Of this, new space contributed 6.0 percent while comparable store sales were unchanged year-on-year, with a deceleration in recent weeks.

"Ahead of the key retail trading period in the second half, Burberry currently expects adjusted profit before tax for the twelve months to 31 March 2013 to be around the lower end of market expectations."

Burberry, famous for its trench coats and trademark red, camel and black check design, had thus far bucked the gloomy trend in the wider retail sector due to its exposure to emerging markets like Asian powerhouse China.

However, the group had revealed earlier this year that it faced "challenging" trading conditions.

"As we stated in July, the external environment is becoming more challenging," added Burberry chief executive Angela Ahrendts in Tuesday's statement.

"In this context, second quarter retail sales growth has slowed against historically high comparatives.

"Given this background, we are tightly managing discretionary costs and taking appropriate actions to protect short term profitability, while continuing to execute on our proven five key strategies."

In recent years, Burberry has been at the forefront of the global surge in demand for luxury goods, bolstered by soaring sales in China. At the same time, many mid-market retailers have struggled for survival amid poor economic conditions.

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