Burberry fell out of fashion in the City on Wednesday after the luxury trenchcoat-maker warned the tourist boom to the UK had slowed, and said shoppers were opting for lower priced items over Christmas.
The FTSE 100 firm said that sales in Britain declined by a “high single digit percentage” in the three months to December 31.
That contrasted with a booming market in London a year earlier, when tourists flocked here to gain from the weak pound.
Burberry also said that its focus on outfits during the quarter meant customers snapped up more lower-priced goods such as tops and trousers.
Finance chief Julie Brown also pointed to a slowdown in China.
Group retail revenue was £719 million, down from £735 million a year earlier, and comparable sales rose 2%.
The figures were at the lower end of analyst expectations, and shares in Burberry plunged 140.50p, or 7.9%, to 1644.5p.
Burberry’s update comes two months after new boss Marco Gobbetti unveiled plans to move the company more upmarket to up the fight with rivals LVMH and Kering. He will take the axe to a number of stores not close enough to its high-spending shoppers.
This spring it will unveil a new collection of bags, featuring some more expensive goods.
Gobbetti said the design house is on track to meet full-year profit targets.
Burberry is still seeking a replacement for Christopher Bailey, the designer who turned the firm into a global label, who will be leaving this year.