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3. Falling Chinese market and currency fluctuations


China has largely been the fashion retailer’s safe bet for guaranteed sales over the past decade - that was until this summer.

On July 27 – aka Black Monday - two-thirds of all companies listed on the Chinese stock exchange lost 10% of their value.

By the week commencing August 10 The People’s Bank of China had devalued the yuan by 4%, equivalent to a three-year low. On August 24 more than £70bn was wiped off the value of Britain’s top companies, the worst day of trading since March 2009, as fears grew over the state of the Chinese economy.

Luxury brands were hardest hit by the on-going uncertainty, with Burberry attributing a 7.3% drop in profits to the challenging environment for luxury in China. Hugo Boss was another casualty, cutting sales and profit forecasts by 2% due to declining demand in China. While the long term effects of the Chinese correction remain to be seen, retailers will be hoping China can bounce back.

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