Italian brand Dolce & Gabbana (D&G) expects sales in China to fall in the current fiscal year after a slowdown from 2018 to 2019, signaling that the brand is still struggling to shake off the fallout from a racist video that insulted Chinese people last November.

Chinese customers account for more than a third of spending on luxury products worldwide, and are increasingly shopping for these in their home market rather than on overseas trips.

Dolce & Gabbana's overall revenue in the year ended March 2019 grew 4.9 percent to 1.38 billion euros ($1.54 billion), more than half of which came from sales in shops and outlets, the group said in a filing to Italy's Chamber of Commerce seen by Reuters.

But the Asia-Pacific market shrank to 22 percent from 25 percent of total turnover, and the group expects sales in the Chinese mainland, Taiwan, Hong Kong and Macao to decline in the current fiscal year ending in March 2020, the filing said.

Dolce & Gabbana, which does not publicly disclose its results, was not immediately available for a comment.

Last November the group was forced to cancel a marquee show in Shanghai after a racist advertising campaign roused a strong backlash from consumers and celebrities on social media, and led to Chinese e-commerce sites boycotting D&G products.

Users reacted angrily to the racist adverts showing a Chinese woman struggling to eat pizza and spaghetti with chopsticks. 

The blunder was compounded when screenshots were circulated online that appeared to show co-founder Stefano Gabbana making negative remarks about China, though the designer said his account had been hacked.

Gabbana and co-founder Domenico Dolce later asked for China's "forgiveness" in a video posted on China's Twitter-like Sina Weibo, in an attempt to to salvage a crucial market for the luxury brand.

The company's results filing does not mention the incident, but the slowdown in Asia contrasted strongly with the Americas, where sales increased to 16 percent of 2018 to 2019 turnover, up from 13 percent a year earlier. Other markets remained stable, with Italy accounting for 23 percent of revenue, Europe for 28 percent and Japan 5 percent.

Overall sales are expected to increase slightly in the current fiscal year, but with costs at almost 60 percent of revenue, profitability is suffering.

In the last fiscal year, Ebitda - earnings before interest, tax, depreciation and amortization - fell by more than 40 percent to 87.2 million euros, with a contraction in margins dropping to 6.3 percent from 12.2 percent of sales.

However, the group said that things could improve in the second half of the 2019 to 2020 year.

"The good start of the Fall/Winter retail season could be the sign of a better-than-expected second half of the year," it said.

The latest industry 2019 outlook, released by consultancy firm Bain in June, forecast a 4 to 6 percent increase in global sales of luxury goods at constant currencies, thanks largely to booming Chinese demand. Sales of Luxury goods in the Chinese mainland are expected to rise 18 to 20 percent.