China’s zero-COVID approach dented Burberry (BRBY.L) sales in the first quarter as the pandemic enters its third year.
The retailer saw a 35% fall in same-store sales in mainland China in the first quarter, but a stronger dollar will provide a bigger boost to full year sales.
China is a key market for the industry, with Chinese buyers accounting for around a third of the global luxury sales before the pandemic, both at home and as tourists abroad.
Burberry's sales grew 16% in the period outside China, with trading in Europe, the Middle East, India and Africa up 47% compared to the lockdown-hit in Q1 2021, thanks to a rebound in sales to US tourists in the region.
Overall sales at the fashion brand rose just 1%.
Shares in the company plunged to the bottom of the FTSE 100 (^FTSE), sliding as much as 7% after the announcement.
Despite the downturn, Burberry is still on track to add 65 newly designed stores in the 2023 financial year.
Chief executive Jonathan Akeroyd said: "Our performance in the quarter continued to be impacted by lockdowns in mainland China but I was pleased to see our more localised approach drive recovery in EMEIA (Europe, the Middle East, India and Africa), where spending by local clients was above pre-pandemic levels.
"Our focus categories, leather goods and outerwear continued to perform well outside of mainland China and our programme of brand activations boosted customer engagement.
"While the current macroeconomic environment creates some near-term uncertainty, we are confident we can build on our platform for growth."
The pandemic remains the biggest challenge facing the luxury goods industry as Cartier owner Richemont (CFR.SW) also reported a sales hit from the lockdowns in China.
Sales in mainland China tumbled 37% as stores were shut and lockdowns rolled out in cities such as Shanghai and Beijing.
Shares in Swiss group tumbled 5.8% on Friday despite sales outside China topping estimates.
Quarterly ales at the Swiss luxury group surged 12% as a rebound in European and US markets outweighed the slump in China.
Sales rose to €5.3bn ($5.3bn, £4.5bn) in the quarter to the end of June from €4.4bn last year, driven by rebounding demand for luxury goods in the US, Japan and Europe despite surging inflation and economic gloom.
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