Fashion retailer Burberry missed the mark as retail revenue grew by only 2% in the first half of the year, down from 8% in the first quarter, and well below analysts’ expectations.
The company revealed on Wednesday that sales in Hong Kong “decelerated further” in the second quarter, while mainland China sales “decreased slightly” in the first half.
“The external environment became more challenging during the half,” said Burberry CEO Christopher Bailey.
Slow sales in China is not a good sign for the company, which has focused on the region as a key driver for its business.
“Worries about a China/Asia slowdown are justified with the legendary Chinese consumer spending less on their much loved luxury goods at home, even if they continue to ring up the tills in Japan and Europe thanks to currency benefits,” Mike van Dulken, head of research at Accendo Markets, told CNNMoney.
The company says it has taken “swift action” to adjust costs and minimize slipping sales in its luxury market.
“Our plans for the festive season position us well to return to a more positive sales trend in the all-important second half,” Bailey said.B