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Burberry cuts profit forecast after flat sales


Models wear Burberry on the catwalk

Models wear Burberry on the catwalk

Models wear Burberry on the catwalk

BURBERRY, the fashion and luxury goods group which has been hit by falling demand in China, warned full-year profits will be "around the low end of expectations" as it reported flat second-quarter sales.

Burberry said it expected sales to be a the lower end of expectations.

Angela Ahrendts, the chief executive, said like-for-like sales – those at stores open for a year or more – were unchanged in the 10 weeks to September 8 after a sharp drop off recently.

The only growth came from new stores and space, which contributed 6pc to retail sales growth at constant exchange rates.

Ms Ahrendts said: "As we stated in July, the external environment is becoming more challenging ... 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."

Burberry now expects adjusted profit before tax for the financial year to be "around the lower end of market expectations" and the chief executive is planning to meet investors to explain the "deceleration" in sales.

In July, Stacey Cartwright, the Burberry finance director, said: “We’ve seen a slowdown in gift giving in China. That’s small leather goods, cashmere scarves, but also trench coats. In China there is a political change later this year and we think some consumers are nervous about spending ahead of that change.”

The company’s relatively cautious comments alarmed the market and Burberry shares to a year low of £11.58. The shares have since risen 19pc since then to close at £13.75 on Monday.

Burberry shares dropped 17pc in early trading in London.