Burberry hit by Hong Kong protests

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British luxury brand Burberry warned that a fall in sales in the key market of Hong Kong in the last quarter of 2014 could impact its full-year margin.

Pro-democracy protests took place in parts of the Asia financial centre in late September, disrupting business in one of the world’s top markets for luxury companies.

Known for its raincoats with camel, red and black-check patterned linings, Burberry said underlying retail sales rose 15 per cent to £604m in its October to December third quarter, with comparable growth of 8 per cent, steady on the previous quarter. Burberry said Asia-Pacific delivered low single-digit percentage growth compared to double-digit growth in the previous six months, as sales in the high-margin market of Hong Kong fell slightly even though mainland China and Korea grew by a mid to high single digit percentage. Even before the protests, luxury goods companies had been under pressure from an anti-corruption campaign in China, which has sapped appetite for such goods among mainland Chinese, some of Hong Kong’s biggest tourist spenders.

Burberry said the slowdown in Hong Kong and a change in the regional sales mix had more than offset a modest improvement from exchange rate movements, which it had said in November could hurt its full-year retail/wholesale margin.

It reiterated the rest of its outlook for the full-year for its wholesale and licensing businesses, and added that it expects net new space to contribute about 5 per cent to total retail revenue growth.

Christopher Bailey, from Halifax, took over as chief executive in May last year, combining the role with that of chief creative officer.

Burberry employs more than 700 people in Yorkshire, with the vast majority based at its factory in Castleford where it manufactures outerwear, including the iconic trenchcoat.

The company weaves gabardine fabric and heritage check linings at the Burberry Mill in Keighley.