Checks and balances at Burberry as Brexit boosts

Fashion chain Burberry is expected to unveil mixed fortunes in a trading update this week, with a fall in first-quarter same-floorspace sales offset by a sizeable currency gain following the UK's Brexit vote.

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City analysts have forecast a 5 per cent slide in sales as the company is seen as continuing to be hit by China’s consumer slowdown, having posted a 
10 per cent fall in pre-tax profits to £421 million in May.

Sales also fell 5 per cent in the previous quarter to end-March as the luxury products market came under pressure. However, Burberry is also expected to have benefited from the plunge in sterling since last month’s European Union referendum vote, with much of the retailer’s sales coming from overseas and from tourists to the UK, where it makes its products.

JP Morgan forecasts a £90m currency boost, with sterling currently trading at 30-year lows to the US dollar. The retailer makes most of its sales in foreign currencies, but pays much of its costs in sterling.