Burberry sees lackluster sales growth, hurt by China slump

Bloomberg

Burberry Group Plc showed lackluster sales growth last quarter as customers in China were kept at home first by strict pandemic controls and then, at the very end of the year, by a viral surge as
the government loosened
restrictions.
Comparable store sales rose 1% in the quarter ended December 31, 2022, below the 1.4% gain analysts anticipated. The performance was held back by a slump in China, where sales plunged 23%, the British fashion brand said in a statement on Wednesday.
Burberry stock fell slightly before gaining again in London.
Demand for luxury goods in China — the industry’s largest growth engine — was muted by continued Covid-19 restrictions for much of last year. A policy U-turn in December, in which the government abruptly abandoned controls, may kindle a rebound in coming months, analysts said, but only once the infection surge has abated.
Burberry is entering a new era as Chief Creative Officer Daniel Lee, hired last year to invigorate the brand, prepares to present his first runway collection next month at the London Fashion Week.
The British luxury retailer follows Richemont in reporting weak sales in China earlier today. The fashion brand reiterated its outlook.
Burberry’s worse-than-expected third quarter is likely to be viewed as a temporary setback as the situation in China is expected to improve in 2023, RBC analysts wrote in a note.