Burberry hit by Covid-19 disruption but encouraged by recent Asia tradingComments Off on Burberry hit by Covid-19 disruption but encouraged by recent Asia trading
Burberry on Frisay said it is encouraged by a “strong rebound” in parts of Asia where lockdowns have eased, as it outlined how UK shops will look in future.
The FTSE 100 company, known for its trademark trenchcoats, revealed how Covid-19 travel restrictions and store closures hurt sales and profits for the year to March. But it also pointed to signs of growth since then.
Chief executive Marco Gobbetti said: “It will take time to heal but we are encouraged by our strong rebound in some parts of Asia.” Sales since the start of April in mainland China and Korea are ahead of the prior year.
The shares improved 34p to 1409p. Finance chief Julie Brown said when its UK branches reopen, stores will mirror what other sites are doing to promote social distancing. That includes staff splitting shifts, limiting the number of customers allowed in, and having signs up about distancing. Hand sanitisers will also be on site.
Burberry still expects difficulties ahead, with around 50% of its 421 sites still closed.
It booked a charge of £241 million in the year to March linked to the crisis, taking into consideration factors such as write-down on the value of stock.
It saw pre-tax profits fall to £169 million from £441 million and it said revenues for the year to March fell 3% to £2.6 billion. Comparable sales dropped 27% in the fourth quarter.
Burberry declared a full-year year dividend of 11.3p, down 73%.
It said given the uncertainty caused by Covid-19, “we believe it is prudent to protect our liquidity position at this time”. As a result, a final dividend has not been declared with future dividend payments to be reviewed at the end of FY 2021.
The move makes makes Burberry the latest FTSE 100 company to cut dividends.
The retailer has previously pointed out that before the virus escalated, it was seeing a “positive” response to new products. The boss today said: “Prior to Covid-19, we were delivering strong momentum across our brand and product, with sales ahead of our expectations.”
Gobbetti added: “We have taken swift action to mitigate the financial impact on our business, while prioritising the safety and wellbeing of our teams and customers. We have a strong balance sheet and liquidity, with space for investment when markets recover.”