Burberry Sales Growth Hit by Hong Kong Protests

HONG KONG, Hong Kong — Burberry Group Plc predicted that Hong Kong will remain a drag on sales growth — and profitability — after pro-democracy protests in the city crimped luxury consumption last year.

External data points such as hotel occupancy rates suggest that Hong Kong, which accounts for more than 10 percent of revenue and is one of the most profitable markets for London- based Burberry, “will continue to be challenging,” Chief Financial Officer Carol Fairweather said today on a call with analysts. Burberry shares fell as much as 2 percent.

Companies from Burberry to Prada SpA have been affected by the Hong Kong protests that ended last month. Burberry’s sales in the city fell by a low-to-mid single-digit percentage in the three months through December, the company said today, with Fairweather citing “a significant” decrease in store visits.

“Global events seem to be conspiring against luxury retailers at present,” said David Alexander, an analyst at researcher Conlumino, also citing the crisis in Ukraine and weakening consumer sentiment in China. “Lackluster growth in the Asia-Pacific region will be particularly concerning to Burberry given its strategy of tapping into emerging markets.”

Burberry shares were down 7 pence, or 0.4 percent, at 1,657 pence as of 10:46 a.m. in London, even after the company reported quarterly revenue that beat estimates.

A holiday campaign featuring Romeo Beckham, son of former soccer player David and singer-turned-fashion designer Victoria, boosted sales of trenchcoats and cashmere scarves in the Americas, compensating for the decline in Hong Kong.

Asia-Pacific sales climbed by a low single-digit percentage in the quarter, Burberry said. Total retail revenue rose 14 percent to 604 million pounds ($916 million).

By: Andrew Roberts; editors: Celeste Perri, Paul Jarvis and Thomas Mulier.