Burberry’s new Goddess perfume and the first collection designed by famed fashion guru Daniel Lee helped first-half revenue rise to nearly £1.4 billion.
Sales in China were up 15% overall in the six months to the end of September.
But it warned of weaker demand for the luxury sector which could lead tomissing profit targets, although it has had a stellar year so far.
The Bond Street giant told City investors that “if the weaker demand continues, we are unlikely to achieve our previously stated revenue guidance for 2024.”
In China — one of its most important markets — spending “shifted offshore” dropping by 8% on the mainland.
Known for its check pattern, Burberry highlights its London heritage with style-conscious big spenders. One of its best-known trenchcoats is called Waterloo and sells for £1,890. Its cashmere scarves cost £650.
The 167-year old firm launched its latest collection at a London fashion week event in Highbury Fields in September, the second from Lee as its head designer, who hopes to boost sales of its accessories range.
It is also pinning its hopes on a new perfume, Burberry Goddess, priced at around £95 a bottle, advertised by British-French actress Emma Mackey, who starred in the film Death on the Nile.
After years of stellar growth in China — with shoppers from Shanghai to Shaoguan snapping up its must-have coats, scarves and bags — Covid-era restrictions in China hit sales. Ever since, investors have been keeping close watch on the recovery in demand there.
The stop-start nature of China’s rebound has been a factor across the whole sector. For Burberry, Asia sales growth fell to just 1% in the second quarter, down from 18% in the first quarter, limiting an overall rise for the first half to 10%.
It hit hopes in the City for consistent signs that one of the £6.3 billion company’s main engines for growth would be roaring ahead.
Joshua Mahony at Scope Markets said: “The fact that Burberry saw particular softness in Chinese demand around September will ring alarm bells over the outlook for the fourth quarter.
“Unfortunately, China is just one part of a wider macro story that could put pressure on luxury goods sales, with the effects of higher interest rates still feeding through into the global economy.”
Today’s drop for Burberry’s stock took it to 1583p, down 162p, or 9%. It was the day’s biggest fall on the FTSE 100.
The company’s continental rivals for high-end customers in China were also unnerved. In Paris, LVMH’s stock dropped by 1% and Christian Dior was down by the same margin.
Russ Mould, investment director at stock broker AJ Bell said: “In one sense Burberry shareholders will be reassured to see other luxury peers struggling as it suggests the company is not facing problems of its own making.”
“All it can do right now is protect and invest in its brand and wait for an improvement in the backdrop.”