- Burberry says its comparable sales came in 27% lower in the fourth quarter.
- The luxury fashion house suspends its final dividend on COVID-19 uncertainty.
- The UK retailer posts a 3% decline in revenue and an 8% decline in operating profit.
Burberry (LON: BRBY) warned on Friday that the impact of the Coronavirus pandemic will take time to subside in the UK’s luxury industry. The company said that its comparable sales in the fourth quarter came in 27% lower. It concluded the final quarter with roughly 60% of its nationwide retail stores remaining closed amidst the health crisis.
The British company cited the rising COVID-19 uncertainty as it suspended its final dividend. Future payouts, Burberry added, will be based on a meticulous review at the end of fiscal 2021. Burberry donated personal protective equipment (PPE) to NHS last month.
Shares of the company are currently posting an over 1% intraday gain. At 1,409 pence per share, Burberry is about 35% down year to date in the stock market. Learn more about capital markets.
Burberry’s sales plunged in China in late January
Much like its competitors, the luxury fashion house started to see business disruptions due to the pandemic in late January when it reported a significant decline in sales in China. The largest Asian economy marks a crucial market for Burberry.
In March, when the flu-like virus started crossing borders quickly and established an epicentre in Europe and North America where it pushed the retailer’s stores into temporarily shutting down, its losses widened sharply in these regions and weighed further on its financial performance in 2020. Burberry upgraded its full-year outlook in January.
CEO Marco Gobbetti’s remarks on Friday
Before the outbreak, CEO Marco Gobbetti was on track to reposition the high-end fashion label with a stronger than expected growth in sales. As per Gobbetti:
“Since then, the global health emergency has had a profound impact on the world, our industry and Burberry, but I am very proud of the way we have responded. It will take time to heal, but we are encouraged by our strong rebound in some parts of Asia and are well-prepared to navigate through this period.”
At £2.63 billion, Burberry’s annual revenue came in 3% lower on Friday while its adjusted operating profit tanked 8% to £404 million at constant exchange rates.
Burberry has recovered around 30% from its year to date low of 1,085 pence per share in late March. The company posted its record-high of 2,345 pence per share in the stock market last July.
Its performance in 2019 at large was reported upbeat with an annual gain of 30%. At the time of writing, Burberry is valued at £5.70 billion and has a price to earnings ratio of 16.26.