Burberry Warns, Shakes Up Luxury Sector

by Alyssa Oursler | September 11, 2012 9:27 am

Burberry Warns, Shakes Up Luxury Sector

Shares of Burberry Group (PINK:BURBY[1]) fell nearly 20% yesterday as the luxury apparel company lowered its profit outlook[2] for the year.

The company blamed the news on slowing sales. Same-store sales, for example, were unchanged in the last ten weeks.

The luxury sector weathered the tough economic climate better than most at first, but other recent poor reports have also showed signs of a crack in their armor. Tiffany & Co. (NYSE:TIF[3]), for one, gave off a similar warning-sign[4] in its latest difficult quarter, while Coach (NYSE:COH[5]) has struggled of late.[6]

Burberry’s announcement just furthers the possibility that the luxury sector is indeed not immune to the global slowdown. Other luxury stocks, like Louis Vuitton (PINK:LVMUY[7]), were also sent downward on the news.

The sector has been hurt by weakening demand in Asia most notably. Burberry, for one, gets 40% of its sales there.

Analysts also responded to the announcement with countless downgrades of the stock, while many forecast the end of the luxury bubble.

“We wouldn’t be surprised if other luxury players are seeing similar trends,” Seymour Pierce analyst Kate Calver told¬†The Wall Street Journal.

Endnotes:
  1. BURBY: http://studio-5.financialcontent.com/investplace/quote?Symbol=BURBY
  2. lowered its profit outlook: http://online.wsj.com/article/SB10000872396390444017504577644822950553772.html
  3. TIF: http://studio-5.financialcontent.com/investplace/quote?Symbol=TIF
  4. gave off a similar warning-sign: http://investorplace.com/2012/08/do-tiffanys-earnings-foretell-bad-times/
  5. COH: http://studio-5.financialcontent.com/investplace/quote?Symbol=COH
  6. struggled of late.: http://investorplace.com/2012/07/coachs-troubles-made-in-the-usa-coh/
  7. LVMUY: http://studio-5.financialcontent.com/investplace/quote?Symbol=LVMUY

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