BURBERRY has joined other luxury goods brands that have been unable to escape the effects of the credit crunch after its shares slumped on news of weaker trading.
The group, famous for its camel, red and black check design, warned sales were harder to come by in recent weeks, particularly in the United States.
It added that if initial second-half trends continued, profit in the year to March could be toward
s the middle or lower half of market expectations.
Analysts had been looking for earnings of between £160 million and £215m. Analysts at Citi said the statement indicated a drop to a range of between £160m and £188m.
The shares tumbled last night, down 25.25p, or 12.6 per cent, at 175p after earlier touching six-year lows.
The maker of upmarket raincoats and handbags has enjoyed a renaissance under former chief executive Rose Marie Bravo – who moved on in July 2006 to become vice-chairman – and its shares soared to record highs above 720p last year on the back of rising profits.
However, its fortunes have waned along with those of other luxury goods specialists.
Last Friday, Swiss peer Richemont posted a better-than-expected 11 per cent rise in first-half net profits but noted that consumers held back on luxury purchases in October as the financial crisis started to bite. The previous day, Italian luxury goods maker Bulgari warned that its 2008 net profit would be lower than last year's and said October had been a tough month.
Burberry's chief financial officer, Stacey Cartwright, said: "We believe we're still outperforming, but nonetheless, particularly in the US market, there has been a slowdown.
"We continue to have nice positive like-for-like sales growth in our European and Asian markets, albeit it's very volatile and the daily swings are very significant."
The group posted a 3.4 per cent rise in underlying operating profit to £98.4m for the six months to the end of September, but said that since then like-for-like sales were down by "a mid single-digit percentage".
Underlying revenues during the first half hit £539.1m from £449.1m, a rise of 13 per cent, with sales of non-apparel items like shoes and luxury handbags particularly strong.
The interim dividend was maintained at 3.35p.
Chief executive Angela Ahrendts said: "The fundamentals of Burberry remain strong, despite the current very challenging environment."
Burberry said it had identified efficiencies of £15m to £20m for the year to March 2010. It added that further significant savings were under review and would be detailed in January.
Ahrendts also unveiled two joint ventures – the first in the Middle East and the second for non-apparel in Japan.
Burberry Middle East, alongside the Jashanmal Group, will manage all Burberry retail and wholesale distribution in the United Arab Emirates markets of Dubai and Abu Dhabi, as well as Qatar, Oman and Kuwait.
The full article contains 493 words and appears in The Scotsman newspaper.
