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LONDON Oct 15 (Reuters) – A sharp sales slowdown in China and Hong Kong led Britain’s Burberry to miss forecasts for first-half sales growth and warn of an increasingly challenging environment for luxury sales.
The firm said accelerated actions to control costs were expected to minimise the impact on profit for its 2015-16 year and it expected to meet the average forecast of those analysts who have recently updated forecasts, which is 445 million pounds ($ 689.22 million). Burberry made 456 million pounds in 2014-15.
Chinese shoppers, which account for 30-40 percent of Burberry’s global revenue, have grown increasingly cautious this year after the country’s economy weakened, its currency devalued and its stock market tumbled.
The 159-year-old Burberry, famous for its British-made trench coats and cashmere scarves, said on Thursday retail revenue rose 2 percent to 774 million pounds ($ 1.20 billion) in the six months to Sept. 30.
That compared to first quarter growth of 8 percent and was below analysts’ average forecast of 818 million pounds.
First half comparable store sales growth was 1 percent versus analysts’ consensus of 5 percent and growth of 6 percent in the first quarter.
The firm saw a mid single-digit percentage decline in comparable store sales in the Asia Pacific region, which includes Hong Kong and China.
Burberry said the comparable store sales decline in Hong Kong was worse than the double digit percentage fall reported in the first quarter as footfall continued to drop, while mainland China comparable sales decreased slightly in the half.
That outcome was offset by stronger growth in the Europe, Middle East, India and Africa (EMEIA) region and steady growth in the Americas.
($ 1 = 0.6457 pounds) (Reporting by James Davey; editing by Kate Holton)
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