Burberry issues a profit warning on China's slowdown

Burberry shares have fallen after it warned that economic turmoil in China had hit sales, prompting the designer to predict a fall in full-year profits.

The fashion house, led by its former design chief Christopher Bailey, said profits would be in line with recent analysts’ downgrades.

Eighteen of the 26 analysts who cover the firm have cut profit forecasts to £445 million on average, down from an initial £462 million.

It was the biggest blue-chip faller, down more than 12%, or 171p, to 1248p, its steepest drop in three years.

Burberry was the latest luxury retailer to warn of less retail footfall in Hong Kong and mainland China.

Shoppers have been put off by factors such as China’s volatile stock market and a crackdown on bribery.

Sales of its trademark trenchcoats and scarves helped lift group retail revenue 2% to £774 million in the six months to September 30.

Bailey said: "The external environment became more challenging during the half, affecting luxury consumer demand in some of our key markets.

"In response, we have intensified our focus on driving sales and productivity, while taking swift action on discretionary costs."