# Burberry held back by China lockdowns and U.S. weakness
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-07-15
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Burberry Sales Hurt by Lockdowns in China and Americas
Meta Description: Luxury brand Burberry experiences limited 1% rise in sales due to COVID-19 disruptions in China and decline in Americas market. Shares fall 7%.
URL: https://financedigest.com/burberry-held-back-by-china-lockdowns-and-u-s-weaknesshtml

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By Paul Sandle

LONDON (Reuters) -Luxury brand Burberry was hurt by lockdowns in its biggest market China and an abrupt reversal in fortunes in the Americas, limiting its first-quarter sales rise to 1%.

The British brand, known for its red, black and camel check and TB monogram, saw comparable sales in mainland China plunge 35% as COVID-19 lockdowns disrupted stores and distribution.

All its stores were open by the end of June, Chief Financial Officer Julie Brown said, and the company was “encouraged” by how they were performing, but testing requirements were [holding back](https://www.financedigest.com/are-legacy-it-systems-holding-the-construction-industry-back.html "Are legacy IT systems holding the construction industry back?") the return of some shoppers.

[Luxury rival Richemont also felt the shortfall in mainland China](https://www.financedigest.com/loreal-buys-luxury-brand-aesop-with-eye-on-china.html "L’Oreal buys luxury brand Aesop with eye on China"), where its sales were 37% lower for the quarter.

Outside China, Burberry reported a 16% rise in comparable [store sales](https://www.financedigest.com/ikea-stores-owner-ingka-says-campaigns-help-boost-store-visits-and-sales.html "IKEA stores owner Ingka says campaigns help boost store visits and sales"), with Europe up 47%, helped by store ranges tailored to local demand rather than to still absent tourists from Asia.

But the Americas, Burberry’s best [performing region last year](https://www.financedigest.com/equity-markets-show-strong-end-of-year-performance-in-camradatas-q4-2017-investment-research-reports.html "Equity Markets Show Strong End of Year Performance in CAMRADATA’s Q4 2017 Investment Research Reports"), went into reverse, with comparable store sales down 4%.

Brown said leather bags and outerwear were selling well, but “sneakers and slides – the shoe [business – and the small](https://www.financedigest.com/how-banks-will-evolve-to-support-small-business-owners.html "How banks will evolve to support small business owners") leather goods category (were) somewhat weaker.

I [think this is largely because people](https://www.financedigest.com/55-of-people-who-regularly-play-sport-dont-think-being-verbally-abusive-to-another-player-makes-them-a-bad-sport.html "55% OF PEOPLE WHO REGULARLY PLAY SPORT DON’T THINK BEING VERBALLY ABUSIVE TO ANOTHER PLAYER MAKES THEM A BAD SPORT") have changed from staying in and wearing casual wear to be going out a lot more now than they were before,” she said.

Shares in Burberry, which are down 20% over the [last 12 months](https://www.financedigest.com/fintech-trends-to-look-out-for-during-the-last-six-months-of-2019.html "Fintech trends to look out for during the last six months of 2019"), fell 7% in early deals on Friday.

Brown said Burberry was facing increases in transportation, commodity and labour costs, but it was [managing them by focusing on procurement efficiencies](https://www.financedigest.com/driving-business-efficiencies-with-a-dedicated-credit-management-approach.html "Driving business efficiencies with a dedicated credit management approach").

“We’re also very conscious of the pressure on the people and communities,” she said. But in terms of business overall, we’ve not [seen a major pressure](https://www.financedigest.com/euro-zone-yields-fall-as-us-payrolls-seen-easing-rate-hike-pressure.html "Euro zone yields fall as US payrolls seen easing rate-hike pressure") on younger consumers at this point in time.

Burberry said its medium-term target of high-single digit revenue growth and [20% margins](https://www.financedigest.com/ubisoft-vows-to-get-back-to-operating-margin-above-20-in-medium-term.html "Ubisoft vows to get back to operating margin above 20% in medium term") was unchanged.

(Editing by [William James and Mark Potter)](https://www.financedigest.com/youre-a-woman-harry-brits-back-game-of-thrones-maisie-williams-to-play-potter.html "You’re a woman, Harry! Brits back Game of Thrones’ Maisie Williams to play Potter")


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