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Burberry shuts over a third of China stores amid coronavirus disruption

The closures hit sales in China and Hong Kong while spending of Chinese customers in tourist destinations has suffered less

Burberry Group PLC - Burberry closes over a third of China stores amid coronavirus disruption

Burberry Group PLC (LON:BRBY) has shut over a third of its stores in China due to the impact of coronavirus while the rest have seen a “significant” decline in activity.

The closures hit sales in China and Hong Kong while spending of Chinese customers in tourist destinations has suffered less, but may get worse as travel is increasingly restricted.

READ: Market “concerned” over Burberry as Michael Kors owner books US$100mln coronavirus hit

The FTSE 100-listed fashion house continues to implement growth initiatives in preparation for a recovery in luxury demand but analysts were less optimistic.

"The fourth quarter will be a wreck on the catwalk by the looks of things," said Neil Wilson from Markets.com.

"Burberry has been focused on growing domestic China sales... There is bound to material hit to full-year numbers."

He thinks revenue growth for the year could come as a flatline, if not negative, depending on how the final weeks of the year will play out.

Management guided for low single-digit sales growth before the outbreak.

The market was not surprised by this update considering the luxury goods sector was hit hard due to its exposure to the region.

The trench coat maker derived 40% of its revenues from Asia last year as the emerging middle-classes long for European designs.

In afternoon trade on Friday, Burberry shares were off 1% at 1,997p, although that was above an early session low of 1.921p.

-- Updates share price --

Quick facts: Burberry Group PLC

Price: 1297.5 GBX

LSE:BRBY
Market: LSE
Market Cap: £5.26 billion
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