London (Reuters) -Burberry’s biggest market, China, and a sudden change in the brand’s luck in the Americas hurt its first-quarter sales growth, which was only 1%.
The British brand, which is known for its red, black, and camel checks and TB monogram, saw its comparable sales in mainland China drop by 35% because of COVID-19 lockdowns, which made it hard for stores to stay open and for goods to get to customers.
Chief Financial Officer Julie Brown said that all of its stores were open by the end of June, and the company was “encouraged” by how well they were doing. However, testing requirements were keeping some shoppers from coming back to the stores.
Richemont, a competitor in the luxury market, saw its sales in mainland China drop by 37% for the quarter.
Outside of China, Burberry’s comparable store sales went up by 16 percent. Sales in Europe increased by 47 percent, aided by store lines designed to meet local needs rather than attract tourists from Asia, who remained absent.
But sales in the Americas, which were Burberry’s best-performing region last year, went down by 4% in the same stores.
Brown said that leather bags and outerwear were selling well, but that sales of sneakers and slides in the shoe business and small leather goods were not as good.
She said, “I think this is mostly because people used to stay home and wear casual clothes, but now they go out a lot more than they used to.”
Shares of Burberry, which have gone down 20% in the last year, fell another 7% in early trading on Friday.
Brown said that Burberry had to deal with rising costs for transportation, materials, and labour, but that it did so by focusing on how to buy things more efficiently.
She said, “We’re also very aware of the stress on the people and communities.” “But in terms of business as a whole, we haven’t seen a big impact from younger customers yet.”
Burberry said that its long-term goal of high-single-digit growth in sales and a 20% margin was still the same.
