Slowdown in gift giving hits Burberry in the pocket
11/09/2012
Comparable store sales didn't grow in the 10 weeks to September 8 compared with a year earlier. Total sales rose 6%, but only due to new store openings.
Chief financial officer Stacey Cartwright said in July: “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.”
She also said a change in strategy could have affected sales – Burberry is looking to reposition itself in a higher price bracket, for instance, trenches that used to be made in Asia and retailed at £600 will now be made in the UK and cost £800.
Burberry chief executive Angela Ahrendts said on reporting the profit warning: “We are tightly managing discretionary costs and taking appropriate actions to protect short-term profitability."
Morgan Stanley analysts said Burberry's statement was the first major disappointment for European luxury companies.
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