Retail revenues plunge 48% at Burberry
Fashion house Burberry has reported retail revenues of £257m for the 13 weeks to the end of June this year, a 48% drop on last year’s figure of £498m for the comparative period.
However the listed business, which has bases in Castleford and near Keighley, says it is seeing progressive improvement as COVID-19 related Government restrictions ease.
Its update notes: “We expect our second quarter (to end September 2020) to continue to be materially impacted by the pandemic.
“In retail, tourist flows are likely to remain negligible, and store operations are continuing to face significant headwinds, with some remaining closed and operating with reduced trading hours.
“Based on our comp retail sales performance in June 2020 (-20%), we expect Q2 2021 (ended September 2020) to decline by 15% to 20%.
“In wholesale, we are collaborating with our partners to protect the brand and as a result anticipate H1 2021 sales declining around 40% to 50%.”
Marco Gobbetti, chief executive officer, said: “In Q1, sales were severely impacted by the drop in luxury demand from COVID-19 and we expect it will take time to return to pre-crisis levels with the resumption of overseas travel.
“We are encouraged by the improving trends in all regions and the promising exit rate for June.
“We saw an excellent response to new product launches in recovering economies as well as online. Demand for leather goods was particularly strong in Mainland China and Korea, bringing new, younger luxury customers to the brand.”
Burberry says despite the difficult backdrop it is pressing ahead with a strategy to transform and restructure its business.
The update adds: “We are proposing to further streamline our office-based functions and improve our retail efficiency in certain geographies outside the UK.
“Subject to consultation, we expect these changes, which include office space rationalisation, to deliver savings of around £35m in FY 2021, with annualised savings of £55m and an associated one-off restructuring charge of £45m.
“These savings are incremental to our previously announced £140m cumulative cost saving programme.
“Conditional on the macroeconomic recovery from COVID-19 and luxury industry growth, we will be able to reinvest these savings into consumer-facing activities.”
