Burberry Group Plc reported disappointing sale in second half of year and predicted lower profit for the current fiscal year as declining demand in Hong Kong, Europe and U.S.
Burberry said that comparable sales, an indicator that tells how a retailer is performing, fell 2 percent for the six months ended March 31. In the fourth quarter, the comparable sale dropped 5 percent.
The company predicted the profits for the year would be at the lower end of expectations. It also sees that a 10 percent decline in for Wholesale business in the first half of this year.
“The most significant shift in trends that we saw Q3 into Q4 was in continental Europe where we saw a significant decline in tourists, particularly from China,” Burberry Chief Financial Officer Carol Fairweather said on a call with reporters.
It may be a tough year for Burberry as the company see sliding demand in several big countries. Burberry’s sales tumbled by more than 20 percent in Hong Kong in fourth quarter as Chinese shoppers shift to other countries for shopping. Chinese customers account for 40 percent of Burberry’s retail sales. Although sales in Mainland China and Japan increased, stores in these two places are much less than that in Hong Kong, where Burberry has 14 full-scale stores.
In addition, tourists are spending less in Europe after the Paris terror attacks. Sale in U.S. is still soft and tourist spending in the U.S. dropped by a double-digit percentage.
“We are focused on elevating our brand in the U.S. longer-term,” said Chief Financial Officer Carol Fairweather.
Burberry CEO Christopher Bailey is under pressure and need to figure out how to turn around the company’s performance.