Burberry shares dive on international tourist fears

Shares in luxury group Burberry have plunged after it said international tourists avoiding Europe would hit annual profits.
The retailer’s shares fell 6% in early trading as it revealed that total sales had fallen 1% to £1.4billion in the six months to March 31. Retail sales were flat at just over £1billion with like-for-like sales down 2%.”. Wholesale revenue dropped 1% to £330million with licensing revenue down to £16million.
It said growth had continued in mainland China, Korea and Japan but sales to travelling luxury customers had slowed in continental Europe.
Analysts said this was as a result of travellers avoiding France, Germany and other European nations because of unease over fears of further terrorist attacks.
Burberry said: “Sales from the travelling luxury customer, particularly the Chinese, declined year-on-year, offset in part by growth from domestic customers. The UK and Middle East remained difficult throughout the half.” It also warned that US domestic demand “remained uneven.
As a result, it said full-year profits would be pushed to the bottom end of City expectations.
It also warned that the outlook for 2017 was challenging with first half wholesale expected to drop by around 10%.
“In an external environment that remains challenging for luxury, we continue to focus on reducing discretionary costs and are making good progress with developing enhanced future productivity and efficiency plans,” said chief creative and executive officer Christopher Bailey. “Meanwhile brand momentum is strong, digital continued to outperform in the half and innovation in new products is resonating well with our customers.”
It said product innovations had helped demand for scarves, ponchos and runway rucksacks with its Mr Burberry fragrance also doing well.