Burberry warns coronavirus has hit sales in China

Burberry warned on Friday that the coronavirus was damaging its sales in China and Hong Kong and that the outbreak had forced it to close more than a third of its stores in mainland China.

The luxury goods company said 24 of its 64 mainland China stores were closed. Its other outlets are operating with reduced hours and customer footfall is down significantly, it said in an unscheduled trading update.

Burberry said spending by Chinese customers in Europe and other tourist destinations was less affected so far but that it expected the impact to worsen as countries impose travel restrictions.

The FTSE 100 company said it was taking "mitigating actions" but there would be limited benefit in the financial year that ends in March. Burberry said it decided to update investors because the coronavirus outbreak happened after its most recent trading guidance.

Chinese customers make up about 40% of Burberry's sales, including tourists buying items outside China. Burberry has been opening more stores in China to capitalise on demand for its goods from the country's growing middle class.

Chief executive Marco Gobbetti said: "The outbreak of the coronavirus in mainland China is having a material negative effect on luxury demand. While we cannot currently predict how long this situation will last, we remain confident in our strategy. In the meantime, we are taking mitigating actions and every precaution to help ensure the safety and wellbeing of our employees."

Gobbetti said Burberry would keep up its growth initiatives to be ready for a recovery in demand for luxury items. He said his thoughts were with people directly affected by the outbreak of coronavirus.