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Burberry shares tumble after it cuts profit guidance

* Shares (Frankfurt: DI6.F - news) fall around 5 percent

* FX impact on reported revenue of 72 million pounds

* 2015/16 retail and wholesale profit to be 40 mln stg lower (Adds CFO comments, details)

By Li-mei Hoang

LONDON, May 20 (Reuters) - Shares in British luxury goods maker Burberry tumbled on Wednesday after it cut its annual profit guidance, hit by foreign exchange volatility and subdued demand in Hong Kong and the United States.

The 159 year-old firm said 2015/16 profit for retail and wholesale - which makes up the vast majority of its business - would be 40 million pounds ($62 million) lower than expected.

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It came after Burberry reported a rise in group profit for the year to the end of March - but adverse currency movements due to a strong pound took a big bite out of the earnings, which were also pressured by a fall in spending from Chinese customers in Hong Kong.

The company said trading in Hong Kong - which accounts for a tenth of group sales - remained challenging, while the United (Shenzhen: 000925.SZ - news) States was also proving "a little softer" compared to last year. The Americas contribute a quarter of revenue.

"At this early stage of the year, we are seeing increased uncertainty in some markets," said Christopher Bailey, Burberry's chief creative officer who was made chief executive last year and now holds both roles.

Shares in the company, known for its raincoats with camel, red and black-check patterned linings, were down around 5 percent making it the biggest faller on the FTSE index.

"Today's news provides little if any reassurance," said Keith Bowman, analyst at Hargreaves Lansdown (LSE: HL.L - news) .

"The outlook for the group's important Chinese consumer appears to remain finely balanced, whilst currency movements continue to offer significant headwinds," he added.

CURRENCY HIT

Stripping out currency fluctuations, Burberry reported an 11 percent rise in underlying revenue to 2.5 billion pounds and a 7 percent rise in underlying pretax profit to 456 million pounds for the year to the end of March.

However currency fluctuations wiped 72 million pounds from the revenue figure and 38 million pounds from profit.

Sterling hit a seven-year high against a trade-weighted basket of currencies earlier this month.

"With about 40 percent of our revenues in U.S. dollar related currencies, we are exposed to movements in exchange rates from a translation impact," Chief Financial Officer Carol Fairweather told reporters.

"The underlying health of the business remains very strong. It's simply the impact of translation that we can't hedge against," she added.

Burberry said the focus on its British-made trench coats and cashmere scarves had a been a principle driver of this year's growth, as well as its investment in digital which outperformed across all its regions.

It raised its full-year dividend by 10 percent to 35.2 pence per share.

Burberry maintained its April guidance on plans to adjust prices in some markets in response to currency fluctuations, following similar moves by several luxury brands including Chanel, Richemont and Cartier.

($1 = 0.6441 pounds) (Reporting by Li-mei Hoang; editing by Kate Holton and Pravin Char)