Luxury Retailer Struggles but Remains Optimistic for Recovery
- Burberry reports a 27% drop in like-for-like sales in Q4 due to Covid-19.
- Operating profit fell by 57% to £189m compared to £437m last year.
- Revenues decreased by 3% to £2.6bn for the year ending March 2020.
- Pre-tax profit declined by 62% to £169m.
- 60% of Burberry’s stores were temporarily closed by the end of Q4.
- No final dividend declared; future payments to be reviewed.
- CEO Marco Gobbetti emphasizes strong digital connection and liquidity.
- Burberry is encouraged by a rebound in some parts of Asia.
Burberry, the luxury fashion retailer, has reported a significant 27% decline in like-for-like sales for its fourth quarter, attributing this downturn to the ongoing coronavirus pandemic. The company also disclosed a staggering 57% drop in operating profit, which fell to £189 million from £437 million during the same period last year. In its preliminary results for the fiscal year ending March 28, 2020, Burberry noted a 3% decrease in revenues, totaling £2.6 billion compared to £2.7 billion the previous year. Furthermore, the pre-tax profit saw a dramatic decline of 62%, landing at £169 million. nnThe pandemic forced Burberry to temporarily close 60% of its stores by the end of the fourth quarter, leading to the decision not to declare a final dividend, with future payments under review. CEO Marco Gobbetti expressed pride in the company’s response to the crisis, highlighting their swift actions to mitigate financial impacts while prioritizing the safety of employees and customers. He noted that despite the challenges, Burberry maintains a strong balance sheet and liquidity, allowing for potential investments when markets recover. nnGobbetti also mentioned the company’s efforts to strengthen consumer connections through digital channels and their support for relief efforts during the pandemic. While acknowledging the long road to recovery, he remains optimistic about a rebound in certain regions, particularly in Asia, and emphasizes the importance of their strategy to secure a strong position in the luxury fashion market. Earlier this year, Burberry had already warned that the pandemic would affect its sales, with many stores in mainland China operating under reduced hours and experiencing significant declines in foot traffic.
Factuality Level: 8
Factuality Justification: The article provides accurate information about Burberry’s financial performance during the pandemic, including specific numbers and quotes from the CEO. It also mentions the impact of COVID-19 on the company’s sales and operations. The article is not sensational or opinionated, and it does not include irrelevant details.
Noise Level: 3
Noise Justification: The article provides relevant information about Burberry’s financial performance during the pandemic and the CEO’s response to it. It does not contain any irrelevant or misleading information, but it is mostly focused on reporting facts without deep analysis or exploration of long-term trends or consequences.
Financial Relevance: Yes
Financial Markets Impacted: Burberry’s stock price, luxury fashion industry
Financial Rating Justification: The article discusses the financial impact of the coronavirus pandemic on Burberry’s sales and profit, as well as its plans for future dividend payments and strategy. This directly relates to financial topics and has an effect on the company’s performance in the stock market and luxury fashion industry.
Presence Of Extreme Event: Yes
Nature Of Extreme Event: Financial Crisis
Impact Rating Of The Extreme Event: Major
Extreme Rating Justification: The extreme event is a financial crisis caused by the COVID-19 pandemic, which led to a significant decrease in Burberry’s sales and profit, temporary store closures, and changes in consumer behavior.
www.retailsector.co.uk