Burberry’s Stagnating Sales Show End to Luxury Boom – Businessweek

Burberry Group Plc’s (BRBY) flagging sales growth suggests an end to a three-year rally in the luxury-goods industry as wealthy shoppers cut back on past indulgences.

Cie. Financiere Richemont SA, (CFR) Prada SpA (1913) and LVMH Moet Hennessy Louis Vuitton SA (MC) are among companies at the greatest risk of seeing growth shrivel as weakening economies take a toll on demand for expensive apparel and accessories, according to John Guy, an analyst at Berenberg Bank in London.

Burberry, the U.K.’s largest luxury-goods company, said yesterday that full-year profit will disappoint investors after same-store revenue stalled in the last 10 weeks, sending the shares down the most ever and erasing 1.27 billion pounds ($2.04 billion) in market value. Richemont, Prada, LVMH and Gucci-owner PPR SA (PP) also tumbled on concern that the slowdown may not be confined to London-based Burberry as shoppers in China and Korea become more timid about splashing out.

“Asia is carrying the luxury industry today, so any change in the pace of evolution there is going to affect the entire industry,” said Uché Okonkwo, executive director of Paris-based consultancy Luxe Corp. The region is “not as easy to crack as it used to be so brands need to adjust.”

via Burberry’s Stagnating Sales Show End to Luxury Boom – Businessweek.

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