Burberry’s China worries are its shareholders’ worries, too

Chinese sales are no longer in the bag.
Chinese sales are no longer in the bag.
Image: AP Photo / Eugene Hoshik
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Burberry, purveyor of fancy trench coats and lovely scarves, is having a little trouble in China.

Sales at the London-based company were up for the most part in the six months ended Sept. 30, the only blemish being its Asia-Pacific division, where revenue fell 2% (pdf) from the same six months last year.

Investors didn’t take the news kindly, sending the clothier’s shares down as much as 12.5% in early trading with some recovery later in the session.

Like many fashion houses, Burberry gets a big chunk (35%) of its revenue from Asia, and most of that comes from China. But between the country’s stock market volatility, recent currency devaluation, and slowing GDP growth, luxury shoppers are splurging a little less than usual, especially in Macau and Hong Kong.

Interestingly, Burberry had a banner six months in Japan, where revenue at locations open at least a year jumped by more than 50%, despite the Japanese economy’s own sluggishness. Still, Japan accounts for just 2% of global retail and wholesale sales for Burberry, meaning the company still has a big problem in Asia.