Burberry cheers sales rebound on strong Asian and US demand
Luxury fashion house Burberry has revealed that sales rebounded by 32% in its final quarter thanks to strong demand from rich shoppers in Asia and the US.
The group said the fourth-quarter bounce-back in like-for-like store sales came despite 16% of its shops globally still remaining closed due to lockdowns as it resumed dividend payouts to shareholders.
The performance helped limit the fall in full-year revenues to 11%, or 10% at constant exchange rates, with retail turnover down 9%.
Burberry said its UK shops were showing “good promise” since reopening on April 12, but added that performance was being held back by the lack of tourism spend – which accounted for two thirds of UK business before the pandemic.
Its full-year results showed a 12% drop in underlying pre-tax profits to £366 million for the year to March 27.
Underlying operating profits were 9% lower at £396 million, but surged to £521 million on a reported basis from £189 million the previous year.
Burberry said it expects revenues to continue recovering over the year ahead, with growth in the “high single” digits, though an ongoing push to reduce markdowns will constrain its like-for-like performance.
It restarted dividends with a 42.5p a share full-year payout, matching 2019 levels.
Shares tumbled 8% in early trade despite the solid figures amid wider London market falls and profit taking following recent gains.
The group said full-price sales jumped 63% in its final quarter, driven by demand in mainland China, Korea and the United States.
Burberry has benefited from stores being open again in these areas, even though sites across Europe remained shut due to Covid-19 restrictions.
Burberry has also been focusing on selling more products at full price, rather than with discounts.
Chief executive Marco Gobbetti said: “In spite of Covid-19, we achieved our objectives for the period and delivered a strong set of results in 2020-21, ending the year with good full-price sales growth.
“In this next chapter, supported by these foundations and the strength of our teams, we will accelerate our growth.”
But the results showed the difficulties in trading across the UK and Europe throughout recent Covid lockdowns and the absence of travel spend, with annual comparable store sales plunging 44% across the wider Europe, Middle East, India and Africa regions.
“The UK remained challenged, with London performance weak given high tourist exposure,” Burberry said.
Chief operating and chief financial officer, Julie Brown, said the group was not expecting tourism spend to recover to pre-pandemic heights for a “number of years”, with long-haul travel set to take longer to bounce back.
The group is having to focus its efforts on targeting local domestic customers as well as boosting its online offering.
Richard Hunter, head of markets at interactive investor, said: “Burberry has not only put a tough year behind it, but has also clearly turned a corner in positioning for strong future growth.”
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