British luxury goods maker Burberry today reported a slowdown in underlying first quarter retail revenue growth, held back by a further deterioration of the high margin Hong Kong market.
The firm, known for its trench coats and cashmere scarves, said its retail revenue in the three months to June rose by 8% to £407m.
That compared to analysts' average forecast of £414m and was below the growth of 13% recorded in the second half of Burberry's 2014-15 year.
Comparable store sales growth was 6%, in line with analysts' consensus forecast but down from 9% in the second half.
Burberry noted that its Asia Pacific region experienced a low single-digit percentage comparable sales decline, impacted by the "continued challenging environment" in Hong Kong, which weakened further to a double-digit percentage decline in comparable sales.
In mainland China comparable sales grew by a low single-digit percentage and Japan saw exceptional growth, albeit off a small base.
The Hong Kong market, which represents about 10% of Burberry's total retail/wholesale sales, has deteriorated since pro-democracy protests gathered pace last year.
The firm said the slowdown in Asia Pacific was more than offset by growth elsewhere. Its Europe, Middle East, India and Africa (EMEIA) division saw double-digit percentage comparable sales growth, with strength from the travelling luxury customer in France, Italy and Spain in particular.
It said its Americas region delivered high single-digit percentage comparable sales growth.
"While mindful that the external environment remains challenging, we will continue to focus on growth opportunities across channels, regions and products," said Christopher Bailey, the company's chief creative and chief executive officer.
In May, Burberry cut profit guidance for the 2015-16 year, hurt by foreign exchange movements and subdued demand in Hong Kong. Its shares have fallen by 9% over the last three months.
The company today left most of its full-year guidance unchanged.
However, it said if exchange rates remain at current levels, it expected 2015-16 reported retail/wholesale profit would be about £20m higher than at 2014-2015 rates - an increase of about £10m since the May guidance.
Burberry said it expects this increase to be offset by a more adverse geographic mix, particularly from Hong Kong.
