London (AFP) – Luxury fashion group Burberry warned Thursday that annual profits would be at the bottom end of expectations due to a “challenging demand environment”, sending its shares diving.
The British handbag and clothing company also revealed sliding sales for the second half of its financial year, with sharp falls in Hong Kong and Macau.
“We currently expect full-year 2017 adjusted profit before tax to be around the bottom of the range of analysts’ expectations,” the group said in a trading update that also blamed cost inflation pressures.
In reaction, shares tumbled 6.62 percent to 1,256 pence on London’s FTSE 100 index, which was 0.30 percent down at 6,342.6 points in early morning deals.
Sales declined one percent to £1.410 billion ($2.0 billion, 1.8 billion euros) in the six months to the end of March. That compared to a nine-percent increase at the same stage of the previous financial year.
“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,” added chief executive Christopher Bailey.
Burberry, whose financial year runs from April to the end of March, will post its annual results on May 18.
“Burberry has suffered of late due to its dependency on Hong Kong and China, the haemorrhaging of sales in both regions causing havoc for its stock price,” noted Spreadex analyst Connor Campbell.