Store sales slump at Burberry as virus punishes trade
Fashion house Burberry, which has bases in Castleford and near Keighley, has reported revenues of £2.6m in its preliminary results for the 52 weeks ended 28 March 2020, down from £2.7m the previous year.
From the end of January 2020, the listed firm’s trading deteriorated significantly, hit by virus-related store closures, reduced operating hours and significant footfall declines.
As a result, Burberry’s quarter four comparable store sales declined 27%, and full year comparable store sales declined 3%.
Burberry currently has 50% of its store network closed and expects its first quarter (to the end of June 2020) to be severely impacted, with store closures likely to be at or near peak for most of the quarter.
As of 28 March 2020, the business had cash balances of £887m (2019: £837m), which included the cash proceeds from the drawdown of a £300m revolving credit facility .
The company has secured funding of £300m under the UK Government sponsored COVID Corporate Financing Facility to mid-March 2021.
However, it’s update this morning also notes: “We feel confident in the strength of the Burberry brand and are encouraged by the recovery we are experiencing in Mainland China and Korea, with cumulative sales in both markets since the beginning of April ahead of the prior year.
“We have developed a range of possible recovery scenarios based on scientific, epidemiological and economic forecasts and we have prepared tailored capital expenditure and cost mitigation plans for these outcomes.”
Burberry has retooled its factory operations in Yorkshire to make gowns and sourced surgical masks through its global supply chain. To date it has donated 150,000 pieces of PPE to the NHS and care charities.
Marco Gobbetti, chief executive officer, said: “Prior to Covid-19, we were delivering strong momentum across our brand and product, with sales ahead of our expectations.
“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.
“And 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.”