Burberry May Follow Chanel Narrowing Europe-China Price Gap

Burberry Group Plc signalled that it may cut prices in Asia and raise them in Europe, following the likes of Chanel in responding to a growing pricing differential between the regions caused by the weakness of the euro.

“We always maintain our price positioning by market relative to our immediate peers,” Carol Fairweather, chief financial officer of the U.K. luxury-goods maker, said on a conference call Wednesday. “Following that, as prices move, we would also move prices up or down in the same way.”

The euro’s slide this year has led companies including perfume maker Chanel to decrease some prices in Asia and raise them in Europe to iron out a growing disparity in how much shoppers pay for their products in the two regions. Among luxury companies, Burberry has one of the widest gaps between European and Chinese pricing, according to Barclays analysts.

While LVMH Moet Hennessy Louis Vuitton SE said yesterday that it would delay any decision on pricing until currency rates stabilize, “we still believe that in a sustained period of euro/dollar weakness that we will see price gaps have to narrow,” said Barclays analyst Julian Easthope.

Burberry shares were little changed at 1,778 pence at 9:38 a.m. in London trading after the company reported second-half sales that broadly met analyst estimates.