Burberry sales slump as Beijing’s Covid policy hits luxury brands
SHARES in luxury fashion groups Burberry and Richemont slumped after both warned of continuing disruption from lockdowns in China.
London-listed Burberry slid 3.8pc, or 62p, to 1586.5p, as sales fell by 35pc in the 13 weeks to July 2.
And Switzerland-based Richemont, which owns brands such as Cartier and Chloe, fell by 2.9pc as it said China sales tumbled 37pc in the three months to June.
High-end fashion houses have been ramping up their presence in the country but continued lockdowns as part of a ‘zero-Covid’ policy, have stymied progress.
Despite China, both Burberry and Richemont were boosted elsewhere as the cost of living crisis failed to deter wellheeled customers.
Jonathan Akeroyd, Burberry’s chief executive, said: ‘I was pleased to see our more localised approach drive recovery in EMEIA [Europe, the Middle East, India and Africa], where spending by local clients was above prepandemic levels.’
In the EMEIA region, Burberry’s store sales rose 47pc on the same time last year. Handbags, rainwear and jackets performed strongly. This financial year, it expects an operating profit of £90m.
But Sophie Lund-Yates, an analyst at Hargreaves Lansdown, said: ‘Burberry’s first-quarter performance has sorely disappointed the market, with concerns around lacklustre growth rates.
‘Mainland China is acting as a serious drag, overshadowing successes elsewhere – including increased domestic spending in other markets, which is needed to offset lost tourism spending from Chinese visitors to Europe.
Richemont was aided by the falling value of the euro, as overall sales growth hit 20pc.
Performance was strongest in its ‘other’ division, which includes fashion and accessories, followed by jewellery, watchmakers, and online sites such as Net-a-Porter.