Shares in luxury fashion house Burberry dived 18% in early trading on the FTSE 100 after the company warned its latest profits would be at the lower end of expectations.
The company, which has enjoyed rampant growth in recent years, said like-for-like sales ground to a halt in the 10 weeks to September 8 and started to fall over recent weeks.
Total sales, which include new selling space, rose 6%.
The group, which has 196 retail stores, 207 concessions, 48 outlet shops and 58 franchise stores worldwide, warned that as a result of the performance its full year results would come in lower than hoped for at around £407m.
The share sell-off wiped more than £1bn from its market value to leave Burberry stock at its lowest point this year.
Burberry, which was founded in 1856 and is famous for its red, black and camel check, spent much of the year bucking the gloomy trend in the wider retail sector due to its exposure to robust emerging markets, especially China.
But in the company's trading update, Burberry chief executive Angela Ahrendts warned the external environment was "becoming more challenging".
She added: "Given this background, we are tightly managing discretionary costs and taking appropriate actions to protect short term profitability."
The flat like-for-like sales in the second quarter so far are a sharp slowdown from the 6% hike reported for the first quarter to June 30.
Burberry reported a 24% surge in annual profits to £366m in its last financial year, while total revenues were also up 24% to £1.9bn as key Asian markets showed more strong growth and flagship stores in London and Paris performed well.
In the wake of today's statement, retail analyst at Manchester Business School Tarlok Teji said: "These figures just show that Burberry is not immune to global economic conditions.
"Given that Burberry performed so well last year, flat performance against strong comparative numbers could be seen as being good news.
"Typically the luxury end of the market is more resilient than other sectors, and as Burberry has good management and a resilient strategy, it is still likely to be a retail winner in these tough and turbulent times."
