British fashion house Burberry Group said on Tuesday third-quarter retail sales were "modestly behind our plan" meaning more stock was sold at a discount, sending its shares down 11 percent to an 18-month low.
"We are still shooting for 210 (million pounds ($412 million) adjusted full-year earnings before interest and tax) ... (but) analysts' forecasts may be a tad lighter this morning," Finance Director Stacey Cartwright told reporters.
Burberry, known for its camel, red and black check fabric design, but also moving into bags and accessories, said total revenue rose an underlying 23 percent to 254 million pounds in the three months to end-December.
Within that, retail rose 14 percent to 161 million pounds with same-store sales up 6 percent, wholesale was 74 percent higher at 74 million pounds, with licensing fees up 7 percent to 19 million pounds. Burberry said it had to "increase infrastructure costs to support this strong growth".
JP Morgan analysts said in a note, "Higher marked-down sales should weigh on gross margin in (Burberry's) second half but this negative should be partly offset by favorable product mix and lower handbag sourcing costs."
Burberry shares hit a low of 433-3/4 pence before recovering to be 9.6 percent lower at 440 pence, valuing the business at 1.92 billion pounds.
Same-store sales in the United States continued to show double-digit percentage growth driven by women's coats, which Cartwright said sold "phenomenally well".
In European retail, Spain declined year-on-year in the third quarter, while Italy was the best performer.
Cartwright said the 74 percent underlying growth in wholesale, in what is a quiet period for the unit, meant Burberry had raised its forecast for second-half growth at the business to 20 percent from previous forecasts of mid-teens growth.
Burberry stock has underperformed the DJ Stoxx personal and household goods index, which includes European rivals like LVMH, Christian Dior and Richemont, by 35 percent over the past 12 months.