British luxury brand Burberry reports strong momentum in brand, product and sales delivered before the COVID-19 outbreak, ahead of previous expectations. Double digit growth in followers and engagement on social platforms year on year, including through the crisis
Comparable sales -27% in Q4 with around 60% retail stores closed at end of March. This compares to +4% for the first 9 months of the year. Adjusting items of £245m predominantly due to store impairments and stock provisions relating to COVID resulting from its expected impact on future cashflows generated by these assets
Mainland China and Korea already ahead of the prior year and continuing to show an improving trend. Europe has remained weak while the U.S. registered negative financials.
Burberry says it responded rapidly to COVID-19 with a comprehensive cost mitigation programme tailored to several outcome scenarios whilst prioritising the safety and wellbeing of its staff. It Yorkshire factory has been retooled to make medical equipment. It also funded research into a vaccine developed by the University of Oxford and donated to charities tackling food poverty in the UK
FY 2021 outlook
”We are not in a position to provide specific guidance for FY21 at this stage as it is currently challenging to predict the course of the pandemic and the longer lasting economic consequences. However, we currently have 50% of our store network closed and we expect our first quarter (to end June 2020) to be severely impacted with store closures likely to be at or near peak for most of the quarter.
We are leveraging our digital platforms to forge stronger connections with our customers and have mitigation plans to conserve cash and reduce operating costs, whilst retaining flexibility to respond rapidly and optimise revenues in markets as they start to recover.”
Prior to Covid-19, we were delivering strong momentum across our brand and product, with sales ahead of our expectations. 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. 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.
We have found new ways to strengthen our connection with consumers, drawing on our digital leadership. We have also mobilised our resources in support of the relief efforts. 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. Now, more than ever, our strategy to secure our position in luxury fashion is key. I would like to thank our teams for their dedication and leadership during these challenging times.” Burberry CEO Marco Gobbetti
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