Burberry CEO Marco Gobbetti has warned it will take time for the luxury fashion brand to “heal” from the impact of coronavirus after it caused Q4 sales to tumble.
Burberry said total sales slid by 27% in the three months to March after 60% of its stores were forced to shut their doors.
“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,” said Gobbetti.
The British luxury fashion house said it saw “strong momentum”, with sales ahead of expectations, before the virus impacted retailers.
It said it has taken a £241 million hit as a result of the pandemic, including £68 million related to stock.
Gobbetti added: “Now, more than ever, our strategy to secure our position in luxury fashion is key. 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.”
The update came as the firm revealed that pre-tax profits for the year to March fell by 62% to £169 million on revenues down 3% at £2.6bn.
Helal Miah, investment research analyst at The Share Centre, said: “It has been a turbulent year for Burberry mainly due to external factors.
“While it handled the disturbances from the Hong Kong protests well, there was no way of skipping around the Covid-19 outbreak which first hit the Far East, one of its most important markets.
“Despite a dividend cut, investors have now priced this in as now the norm and some encouragement will be taken from the most recent update on trading activity in the Far East where April sales are ahead of the prior year.”
Russell Pointon, Director & Head of Consumer, Edison Investment Research added: “Burberry’s full year results reflect the struggle the company has been going through over the past year on the back of lower demand in Asia due to the ongoing US-China trade tensions, the Hong Kong protests and the Coronavirus epidemic. The luxury giant saw its pre-tax profits fall to £169 million from £441 million and revenues fell 3% down to £2.6 billion.
“With these results, it comes as no surprise that, hoping to ensure liquidity, the company has decided to pull its dividend and review future pay-outs at the end of its 2021 year.
“Prior to the pandemic, Burberry, began to focus on leather goods and accessories in a bid to diversify their brand towards more resilient and growing sectors in the market and that has helped them navigate the current landscape. Although, they´ve had to put a hold on their plan to revive sales with star designer Ricardo Tisci, the opening of stores mainly in Asia should provide some comfort and hope for the company.
“With much of the world still in lockdown, and hence no open shops, turbulent times still lie ahead for Burberry. Nevertheless, given its strong online offering as well as diversification of products, it will be interesting to see if consumers will continue buying online or potentially holding off from luxury during the coming months.”