Burberry shares slump 18% on surprise profit warning

Shares in luxury clothing and accessories group Burberry tumbled by more than 18 percent on Tuesday after the firm issued a surprise profits warning which hit the wider fashion sector. Analysts warned that the news could signal that the high-end luxury goods industry was no longer immune to weakness in the global economy. Burberry said in a trading update that like-for-like sales, stripping out the impact of new floor space, ground to a halt in the 10 weeks to September 8 and have started to fall. As a result, Burberry warned that annual profits would be at the bottom end of analysts\' expectations of between £405 million and £445 million. In reaction, the group\'s share price plunged 18.24 percent to 1,124.15 pence in morning deals on London\'s FTSE 100 index of top companies, which was 0.28 percent lower. In Paris, shares in luxury fashion groups LVMH and PPR slid by 3.82 percent and 3.48 percent, to stand at 127.2 euros and 123.45 euros respectively. The overall French market was down 0.42 percent. \"Burberry currently expects adjusted profit before tax for the twelve months to 31 March 2013 to be around the lower end of market expectations,\" it said in a statement on Tuesday. The company, famous for its trench coats and trademark red, camel and black check design, had thus far bucked the gloomy trend in the wider retail sector due to its exposure to emerging markets like Asian powerhouse China. The group had revealed earlier this year that it faced \"challenging\" trading conditions. \"As we stated in July, the external environment is becoming more challenging,\" added Burberry chief executive Angela Ahrendts in Tuesday\'s statement. \"In this context, second quarter retail sales growth has slowed against historically high comparatives. \"Given this background, we are tightly managing discretionary costs and taking appropriate actions to protect short term profitability, while continuing to execute on our proven five key strategies.\" In recent years, Burberry has been at the forefront of the global surge in demand for luxury goods, bolstered by soaring sales in China. At the same time, many mid-market retailers have struggled for survival amid poor economic conditions. \"We have been fans of Burberry, and remain of the view that the strategy, luxury positioning and management team should lead to long-term sector outperformance,\" said Investec Securities analyst Bethany Hocking. \"Today\'s statement does, however, imply a significant slowdown and Burberry is not immune from wider macro-economic turbulence.\"