Analysts
warned that the news could signal that the high-end luxury goods industry was
no longer immune to weakness in the global economy.
Burberry
said in a trading update 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.
As a
result, Burberry warned that annual profits would be at the bottom end of
analysts' expectations of between £405 million and £445 million.
In
reaction, the group's share price plunged 18.24 percent to 1,124.15 pence in
morning deals on London's FTSE 100 index of top companies, which was 0.28
percent lower.
In
Paris, shares in luxury fashion groups LVMH and PPR slid by 3.82 percent and
3.48 percent, to stand at 127.2 euros and 123.45 euros respectively. The
overall French market was down 0.42 percent.
"Burberry
currently expects adjusted profit before tax for the twelve months to 31 March
2013 to be around the lower end of market expectations," it said in a
statement on Tuesday.
The
company, 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.
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.
"We
have been fans of Burberry, and remain of the view that the strategy, luxury
positioning and management team should lead to long-term sector outperformance,"
said Investec Securities analyst Bethany Hocking.
"Today's
statement does, however, imply a significant slowdown and Burberry is not
immune from wider macro-economic turbulence."
Source: MSN.Com
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