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When Burberry staged its catwalk show in February, after a dramatic crack of thunder, fake rain streamed down on to a glass roof high above models holding giant umbrellas.
On Tuesday the storm was not simulated in order to sell more raincoats, but real. The luxury goods group issued a profit warning, sending its shares down 22 per cent.
The warning raised fears over the broader luxury goods sector, which until now had appeared to defy the global economic downturn as wealthy Chinese and Middle Eastern consumers continued to snap up products ranging from £500 Louis Vuitton scarves to £10,000 Cartier watches.
“We have already started seeing a slowdown in luxury,” says Kate Calvert, analyst at Seymour Pierce. “There has been evidence of it, but this is a slight acceleration.”
Burberry said it had experienced a broad slowdown, with fewer visitors to its shops in Europe, the US and Asia.
Sales from stores open at least a year were flat in the 10 weeks to September 8, with like-for-like sales falling in the past couple of weeks. Pre-tax profit to March 2013 is expected to be at the lower end of the £407m to £455m range.
Shares in luxury goods groups in Europe and the US fell on concerns that Burberry’s warning – based on data up to last Saturday – could indicate a sudden, broader slowdown in the luxury market. “We know we are not alone,” says Stacey Cartwright, Burberry finance director.
Concern had already been rising that Burberry could be at risk from a slowdown in the Chinese luxury market. “Of course China is a contributor [to the decline],” says Ms Cartwright.
In China, retail sales remain relatively strong despite the mainland economic slowdown, with sales up 13 per cent in July, buoyed at least in part by luxury goods sales.
However, one survey of luxury market consumers in China found that they were planning to shift spending patterns due to economic uncertainty. Luxury-brand watches appear to be off the shopping list, with 54 per cent of respondents saying they planned to spend less on jewellery over the next 12 months, according to the survey, conducted in June by Ipsos and Ruder Finn.
Handbags and watches were also not priorities. But those people surveyed said they planned to spend more on high-end shoes, top wines, spirits and cigars, and luxury cosmetics.
Burberry is also experiencing a slowdown in Europe and the US. This would echo disappointment at Tiffany, where falling sales in the Americas and Asia last month forced the jewellery retailer to cut its full-year profit forecast for the second consecutive quarter.
Other rivals continue to power ahead. Hermès International raised its annual targets on sales and profitability after the French luxury goods company reported higher than expected first-half profits buoyed by continued strong demand in China for its Birkin bags and silk scarves.
Italy’s larger listed luxury goods groups so far seem to be faring well. John Guy, analyst at Berenberg, says there have been positive comments form Ferragamo and Ermenegildo Zegna.
Ms Cartwright believes it is the more established “heritage” brands that are being affected, rather than new entrants to the market, which “have got more fuel in the tank perhaps for this particular stage in the cycle”.
This suggests some of the problems might be more Burberry-specific.
The group has been moving increasingly upmarket, targeting the highest spending consumers around the world, including in China.
Cheaper handbags, made in Asia, have been pruned. The lowest price for a trenchcoat has risen to about £1,000. “There is some self-inflicted pain,” says Mr Guy.
Paul French, chief China market analyst at Mintel, suggests Burberry might have got its styles wrong for China. “If you look at the Burberry collection this year, its very understated …China wants a bit of bling and a bit of logo.”
This raises the question of whether Burberry, in the fickle world of fashion, is just not hot any more.
“Burberry is very well established, and it has gobbled up quite a lot of share,” says Neil Saunders, managing director of Conlumino, the retail consultancy. “The question is: is it doing enough to stand out and defend itself from other players?”
Ms Cartwright denies the problem is the Burberry brand: “Just look at the momentum we have, the noise that we have.”
Nevertheless, the company is taking action, and bringing forward “high impact” products, such as hot colours and goods made of “exotic” skins, to provide an “added wow in the stores” – as well as trimming costs.
This week Burberry opens its new flagship store on Regent Street, while on Monday its catwalk show will be one of the highlights of London Fashion Week.
It will need to convince investors that it can weather a real storm, not just a pretend one.
Additional reporting by Patti Waldmeir in Shanghai and Eric Sylvers in Milan