Hong Kong retail slide undermines Burberry and other luxury brand shares

Retail sales in Hong Kong continued to decline last month, new data showed, sending shares in Burberry lower on Tuesday morning.

According to the Census and Statistics Department, Hong Kong's April retail sales values fell 7.5% year-on-year, while Hong Kong retail sales volume declines 7.6%.

This was better than the 10% contraction predicted by the market and the revised estimate of a 9.8% decline in March.

A breakdown of the data shows durable consumer goods endured the worst decline, falling almost 32%, with electronics down 23% and jewellery and watches falling 17%.

Luxury fashion retailer Burberry's significant exposure to Hong Kong and other Asian markets hit its results last year. Hong Kong represented 9% of group retail/wholesale revenue in the year to end-March and was dogged by significantly lower footfall.

The FTSE 100 group generated underlying revenue of £2.5bn, which was down 1% on the previous year, while like-for-like (LFL) sales were also 1% lower, dragged down by the weakness in Hong Kong and fellow Chinese special economic zone Macau.

Fears of continuing tough times in the region saw Burberry shares fall 1.2% to 1,084p by 1000 BST on Tuesday morning.

Other companies with exposure to Hong Kong include fellow luxury brands Salvatore Ferragamo, LVMH, Richemont and Swatch, all of which were in the red following the data release.