China's slowdown hits Burberry sales

Britain's Burberry provided more evidence of China's economic slowdown on Wednesday when the luxury goods company reported a decline in first quarter sales growth. But Burberry said its growth opportunity in China remained huge, even though first quarter growth in retail revenue from the country dropped to "mid-teens" percent versus growth of about 20 percent in the second half of last year.
"We still see an enormous amount of opportunity ... We think there's enormous momentum in the Burberry brand and lots more to go for there," Chief Financial Officer Stacey Cartwright told reporters.
China's June trade data on Tuesday showed imports rose at only half the pace expected. "We're mindful of negative data that comes out," said Cartwright. She said Burberry currently has 63 stores in China and sees scope for up to 100, with a focus on opening much bigger stores.
China has been one of the main drivers of a boom in luxury brands, with consumers eager to buy designer labels, including Burberry's raincoats and other high-end fashions.
But luxury goods firms' shares have wobbled in the past few months over worries about Europe's sovereign debt crisis and slowing growth in China and other emerging markets, where runaway demand for designer brands has previously managed to offset weaker trends in the United States and Europe.
Shares in the 156-year-old Burberry, famous for its raincoats lined with a distinctive camel, red and black check pattern, fell 6.3 percent after it said revenue increased an underlying 11 percent to 408 million pounds ($632 million) in the three months to the end of June.
That was down from growth of 15 percent in the fourth quarter of the previous year and compares with analysts' consensus forecast for growth of 13 percent, according to a company poll.
Chief Executive Angela Ahrendts described the firm's performance as "robust" but flagged "a more challenging external environment."
Burberry shares, down nearly 20 percent since the end of March, were down 81 pence at 1,203 pence at 1023 GMT, valuing the business at about 5.15 billion pounds.