Burberry has revealed a 62% drop in full-year profits to £169m as a result of the coronavirus pandemic, and warned it could “take some time” before the luxury fashion industry recovers to pre-crisis levels.
Revenue at the British brand fell by 3% to £2.6bn on a reported basis in the year to 28 March. Comparable sales were down 27% in the fourth quarter, during which around 60% of Burberry stores were closed as a result of international lockdowns.
Burberry said it was “encouraged” by the recovery it is already experiencing in China and Korea, although footfall in other parts of Asia, such as Hong Kong, remains weak.
The luxury brand has made a number of cost savings to limit the impact of the virus outbreak on its business, including renegotiating rents and restricting recruitment, travel and other discretionary spend.
Burberry’s trench coat factory in Yorkshire has been retooled to create personal protective equipment (PPE) during the crisis and has so far made more than 150,000 gowns and surgical masks to NHS and care charities.
Prior to the pandemic, Burberry increased the availability of new product in its mainline stores from 10-15% at the start of April 2019 to around 85% by the end of March 2020.
It has also focused more on leather goods and accessories in a bid to position the brand “towards the more resilient and fastest growing segments of the luxury market”.
CEO Marco Gobbetti said: “Prior to Covid-19, we were delivering strong momentum across our brand and product, with sales ahead of our expectations. Since then, the global health emergency has had a profound impact on the world, our industry and Burberry but I am very proud of the way we have responded.
“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. 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.”
Drapers’ coronavirus update
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