Fashion darling Burberry plunges as it unveils shock profits warning

It's the hottest ticket at London Fashion Week, and a brand that has recovered from its "chavvy" connotations to become a global powerhouse in the world of luxury style. So the stock market – and the fashion world – was understandably shocked when Burberry issued a profit warning yesterday, sending its shares plunging 21 per cent.

In a surprise update, the group revealed it had been hit by a slowdown in spending across the world.

The darling of the fashion scene had once enjoyed sales growth in double digits, but yesterday it reported that like-for-like sales ground to a halt in the 10 weeks to 8 September, and its full year profits would be at the bottom end of expectations at about £407m.

Retail sales, including from new stores, were up 6 per cent. The slowdown compares with a strong first quarter, when retail sales grew by 14 per cent.

The chief financial officer Stacey Cartwright said: "In the last two weeks there has been a global slowdown. We have seen this across the board in Asia, the US, Europe and the UK."

Luca Solca, a luxury brands expert at CA Chevreux, blamed Burberry's reliance on very high-end clothing rather than accessories such as handbags. He said: "Apparel – on which Burberry is more dependent than other mega-brands – is softer. In difficult times consumers prefer leather goods and hard luxury accessories as they are more visible and work better as status symbols."

Ms Cartwright said: "The level of growth has slowed but for most people 6 per cent growth would be very good."

Despite its issues, the brand is gearing up for London Fashion Week, where it will present its Burberry Prorsum womenswear spring/summer show on Monday.

Burberry's shares crashed 287p to 1,088p.