Hong Kong protests dent Burberry sales
Sales of Burberry dropped strongly in Hong Kong in the first six months of the year, as protests continue to rock the city state.
The British fashion house said that sales in the region, which accounts for 8% of its Asian revenue, declined by double digits, and warned that more was yet to come.
“We … expect sales in Hong Kong to remain under pressure,” the company said in a statement to the market on Thursday.
Yet, despite these pressures, and against what some analysts were expecting, the company still managed to increase adjusted operating profit by 14% over the period to £203 million.
Meanwhile, revenue grew 5% to £1.3 billion.
Burberry kept its 2020 outlook broadly unchanged “despite incremental pressure on gross margin from the disruptions in Hong Kong”.
Anti-government protests have been raging in Hong Kong for months, forcing many retailers to shutter stores as demonstrators clash with police.
A shining light in the second year of Burberry’s transformation plan was its clothes designed by Riccardo Tisci.
Sales of his collections showed “strong” double-digit growth, meaning new products are around 70% of what is on offer in Burberry’s mainline stores.
“We are pleased with our performance in the half, as we remain on track to deliver the first phase of our strategy. New product now represents a high proportion of our assortment and the customer response has been positive, delivering strong double-digit growth,” said chief executive Marco Gobbetti.
Mr Gobbetti’s team said Burberry’s first carbon-neutral spring/summer catwalk had caught the public imagination, doubling its reach on Instagram compared with the year before, and increasing press coverage by 50%.
Sales in the UK grew in high single digits, the company said.
Growth in China was in the mid-teens, Korea hit high single-digit growth, while Japan was lower, in the mid-single digits, Burberry said.
Sales of men’s clothes grew in the double digits, while women’s fashion saw high single-digit growth.
Mr Gobbetti said: “We … continued to strengthen momentum around our brand and transform our distribution. We delivered financial results in line with guidance despite the decline in Hong Kong, and we confirm our outlook for the 2020 financial year.”