Burberry Earnings: Luxury Brand's Sales Growth Slows Amid China Push

Burberry Earnings: Luxury Brand's Sales Growth Slows Amid China PushBurberry (BRBY) reported 11% sales growth in its second quarter year-over-year, but compared to the first quarter, that marked a slowdown for the luxury fashion powerhouse and shares fell. Burberry also said on Wednesday it expects full-year pretax profit to be in the top half of market expectations.

Shares of the U.K.'s largest luxury brand fell as much as 4% in earlier trading, but pared losses and dropped 2.7% in afternoon trading in London. The decline comes after the shares had rallied 69% this year as the luxury goods industry rebounds from its worst year on record. Burberry has been one of the best performers in the past two years.

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For the three-month period that Sept. 30, revenue rose to £382 million ($604 million) from £343 million ($543 million) in the same period a year ago, driven by growth in Asia and rising demand for coats and leather goods. While this beat the £367.8 million ($582.6 million) average estimate of four analysts compiled by Bloomberg, growth was slower than the 27% sales increase in the first quarter.

CEO Angela Ahrendts nonetheless expressed confidence on full-year profit as the company continues to push ahead in China. "Continued product innovation, digital and customer-service initiatives, coupled with the recent acquisition of our Chinese retail operations, underpin our confidence in delivering long-term sustainable growth," Ahrendts said.

Many luxury retailers have been expanding in Asia, and China in particular. Burberry recently completed the acquisition of 50 stores in China and of the 10 stores it plans to open in the second half of its fiscal year, half will be in China.
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