Store sales decline at fashion house Burberry

Burberry reports that its retail comparable store sales declined 9% for the 13 weeks ended 26 December 2020.

The business recorded retail revenues of £688m for the period, compared to £719m in 2019.

In its third quarter trading update today the company, which has bases in Castleford and near Keighley, adds that COVID-19 related store closures averaged 7% in quarter three FY2021, impacting its trading.

Burberry’s trading update notes: “We currently have 15% of stores closed and 36% operating with reduced hours or restrictions and an uncertain trajectory given the spread of the more transmissible new variants of COVID-19.

“Given this outlook, we expect trading will remain susceptible to regional disruptions as we close the financial year.”

But it adds the business also enjoyed a full-price sales growth driven by new, younger clientele as well as repeat customers, along with a digital full-price sales growth of over 50% with its Mainland China market in triple digits.

The update states: In the COVID-19 context, digital remains a key driver of growth for the business.

“In the quarter, our digital innovations such as pop-ups and local activations on .com supported more than 50% full-price growth in the channel.

“In addition, we continued to use our digital capabilities to link customers to our stores in periods of limited traffic or lockdowns, including through our new live chat functionality on .com, virtual appointments and virtual client events.”

Commenting on Brexit’s impact, Burberry says: “Based on our preliminary analysis, we expect a modest increase in border trade compliance costs as well as some incremental duty under the rules of origin.

“The VAT retail export scheme previously allowing VAT refunds for non-EU tourists has now been stopped.

“This development, which will reduce the attractiveness of the UK as a destination for luxury shopping, will have limited impact on revenue in the current year given the low levels of tourist traffic, but is expected to have a more significant impact when travel flows resume with sales likely to shift between countries.

“We are looking at ways to mitigate any impact this has as tourists return to mainland Europe.”

Marco Gobbetti, chief executive officer, said: “Despite the challenging external environment, we made good progress on our strategic priorities in the quarter.

“We saw a strong increase in full-price sales as our collections and communication resonated well with new, younger clientele as well as existing customers.

“Our localised plans and digital capabilities helped drive growth in rebounding markets and we implemented our planned reduction in markdown.

“While the short-term outlook remains uncertain due to COVID-19, we are well placed to accelerate when the pandemic eases.”

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