LVMHF - Burberry luxury retail stocks slide amid China concerns slowing US sales

Shares of luxury retailers Burberry ( OTCPK:BURBY ), LVHMH ( OTCPK:LVMHF ), and Richemont ( OTCPK:CFRUY ) all fell sharply after some worrying signals in the former’s earnings report.

While Burberry ( OTCPK:BURBY ) reported a beat on earnings per share for the quarter, revenue missed the mark , adding to anxiety on slowing North American sales and lockdown-impacted figures in China.

For the latter, CEO Jonathan Akeroyd blamed a bulk of sales pullbacks in Asia on health restrictions in China.

“In terms of the current trading situation or the current situation in China, what we're finding at the moment is we've got approximately 40% of our distribution in China disrupted that's either through store closures or people not going out because the city is on lockdown,” he told analysts on Friday. “Obviously, we don't know when it will end, like most people.”

For the Americas, sales were not optimistic either. Revenue declined 4% in the region from 2021, with concerns on inflation beginning to bear on sentiment. That factor also prevents management from pushing through as many price increases as it may otherwise be inclined to promote.

“The world is suffering at the moment from major inflationary pressure,” Akeryord acknowledged. “So, we do see opportunities for selective price increases, but we'll be very careful and we'll work with the merchandising team on deciding where to pitch it.”

The overall concerns on China’s outsized impact for luxury retailers as well as inflation impacts even at the upper end of the income scale trickled through to stocks populating the space. Burberry ( OTCPK:BURBY ) shares fell 4.88%, Cartier-parent Richemont ( OTCPK:CFRUY ) slumped 5.28%, and LVMH ( OTCPK:LVMHF ) slid 1.42% during Friday’s trading.

To be sure, there were some notable positives in Burberry’s ( OTCPK:BURBY ) report. Burberry’s European sales jumped significantly with comparable store sales soaring over 47%. American tourists were cited as a prominent tailwind given USD-Euro dynamics .

For further details see: