Fashion house Burberry says luxury industry will need time to recover as half of its stores remain closed amid Covid-19
- ‘It’s going to take some time’ for the luxury industry to recover to pre-crisis levels, says Burberry CFO Julie Brown
- Burberry anticipates pressure on tourism destinations, emphasis on local consumers
British fashion house Burberry said the luxury industry would need time to recover to pre-crisis levels, as half of its stores are currently closed amid the Covid-19 pandemic.
The company reported a 27 per cent drop in comparable sales for the final quarter of the financial year ending March 28, according to preliminary results released on Friday.
“It’s going to take some time” for luxury spending to get back to where it was, said Julie Brown, chief financial operator of Burberry, in a media call.
With the health crisis destroying tourism, she emphasised the importance of attracting local clientele and ensuring a strong relationship with them.
“We are anticipating pressure on tourism destinations,” said Brown. “I think there will be clearly more of an emphasis on the local consumer going forward. The people who were shopping Burberry before when they were abroad, I can imagine they will shop more in their local destinations.”
The company said in the report that they had shortened supply chain lead times, and worked in collaboration with wholesale partners to control inventory levels as a result of the virus outbreak.
“We are proactively allocating current stock across channels and regions to meet demand, and we are strategically leveraging our clearance channels,” said Brown.
“Instead of using our distribution centre in Italy, which was closed for a period, we were shipping directly from suppliers to our Asian countries to ensure there were no disruptions to demand.”
Hong Kong retail sales take historic dip as Covid-19 continues to take toll
The outbreak of Covid-19 first took its toll on the company’s late January sales in China, one of its most important markets, which started to fall sharply amid store closures and reduced footfall in the region.
“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,” chief executive Marco Gobbetti said in the report.
“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.”
Things have started to look up in Asia in the new financial year, which began on April 1. Year to date, Burberry’s sales in mainland China and Korea have increased by double digits compared to the same period of 2019, and continue to improve, Brown said in the media call.
Overall, the company saw a 3 per cent drop in full-year revenue to £2.63 billion (US$3.20 billion) in the final quarter. Net profit dropped to £121.7 million, from £339.1 million a year earlier.
Burberry said given the current uncertainty it had decided not to declare its final dividend and would review future payouts at the end of the 2021 financial year.
