LONDON — Burberry shares plunged 9% on Thursday after the British luxury fashion retailer warned that full-year operating profit will come in at the low end of forecasts amid a global slowdown in luxury spending.

The company also cautioned that it may miss its annual revenue projections for low double-digit growth.

In its fiscal second-quarter earnings report Thursday, Burberry reported that comparable store sales growth slowed to just 1%, down from 18% in the previous quarter, as momentum in China fizzled out.

The company recorded half-year operating profit of £223 million ($276.64 million), down 15% from last year, but CEO Jonathan Akeroyd said Burberry was making “good progress” on its strategic aims.

“We continued to build momentum around our new creative vision with the launch of our Winter 23 collection in September, the first designed by Daniel Lee,” Akeroyd said in a statement.

“While the macroeconomic environment has become more challenging recently, we are confident in our strategy to realise our potential as the modern British luxury brand, and we remain committed to achieving our medium and long-term targets.”

Softer demand for luxury goods is weighing on companies around the world, as economic uncertainty and higher inflation curtail consumer spending on luxury items.

The world’s largest luxury group, LVMH, also reported a quarterly sales slowdown last month, while Cartier-owner Richemont has warned of weaker growth.

“The slowdown in luxury demand globally is having an impact on current trading. If the weaker demand continues, we are unlikely to achieve our previously stated revenue guidance for FY24*,” Burberry said in its earnings report.

“In this context, adjusted operating profit would be towards the lower end of the current consensus range (£552m-£668m)*.”

Along with the global issues facing the industry, Burberry has been vocal about the idiosyncratic challenge it is currently facing in the U.K. due to the government axing VAT-free shopping for international visitors.

Many British retailers, including Burberry, have called on Prime Minister Rishi Sunak and Finance Minister Jeremy Hunt to reconsider the decision on what critics call a “tourism tax.”

The Americas was also a particular problem for Burberry this quarter, with comparable store sales falling by 10%.

“The Americas is Burberry’s worst performer and sorting this out will be top of the agenda for CEO Jonathan Akeroyd,” said Russ Mould, investment director at stockbroker AJ Bell. 

“In one sense Burberry shareholders will be reassured to see other luxury peers struggling as it suggests the company is not facing problems of its own making. All it can do right now is protect and invest in its brand and wait for an improvement in the backdrop.”