Daily Management Review

Burberry's shares went down


On Thursday, shares of British clothing and accessories manufacturer Burberry fell 7.5%, which the strongest decline since October last year. The reason for the drop is the company's financial report for the second half of the financial year 2015/16, when the revenue declined more than expected. Forecasts for the current year are not too encouraging, either.

Dosdldyhai via wikimedia
Dosdldyhai via wikimedia
On Thursday, British company Burberry Group, a manufacturer of clothing, accessories and perfumes, presented the report for the second half of the financial year 2015/16, which ended on 31 March. The company's revenue fell 1% in this period, to £ 1,4 billion ($ 1.99 billion), what occurred below the expectations of experts. Comparable retail sales decreased by 2% (they remained unchanged in the third quarter and fell by 5% in the fourth quarter). According to the report, the company predicts a decline in wholesale in the first quarter of fiscal 2017 by 10%. The company also expects this year’s earnings to be at the low end of expectations because of the "difficult conditions for demand." After the statements’ publication, Burberry shares fell by 7.5%, it is the strongest fall since October last year.
The General Director explained that the business climate difficult for Burberry - sales in Hong Kong fell by 20% (the third consecutive quarter). Tourists in Europe are spending less money after the terrorist attacks, and the US market is difficult for the company. "The most significant change in the fourth quarter compared with the third in continental Europe is a reduction in the number of tourists, especially from China ... It is clear that the events in Paris and Brussels have influenced the sentiment," - said General Director of Burberry Carol Fairweather. Sales in the Americas declined by 3% in this period, in the Asia-Pacific region remained unchanged, and increased by 3% in EMEA region. «Burberry lately suffered due to their dependence on the Chinese mainland and Hong Kong ... The situation is such that the company's problems will not end in the near future", - said analyst at Spreadex Connor Campbell.
Burberry was not the first fashion brand to reported quite badly. Earlier, LVMH issued a statement, according to which the company's revenue grew by 4% in the first quarter and was worse than the expectations. Prada’s profit for the year was the worst for the last five years. 

source: telegraph.co.uk