Burberry leaves forecast unchanged as pandemic forces store closures


Burberry left its financial forecasts unchanged after reporting a 9 per cent decline in same-store sales during the third quarter.

The British luxury goods group, which is moving further upmarket under Italian chief executive Marco Gobbetti, said more than a third of stores worldwide are subject to reduced opening hours or other operating restrictions and 15 per cent of them are closed altogether.

Mr Gobbetti said the group’s new collections “resonated well with new, younger clientele as well as existing customers” and that “localised plans and digital capabilities helped drive growth in rebounding markets”.

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

Gross margins benefited from Burberry’s increased focus on full-price sales and lower levels of markdown, but this was offset by lower tourist traffic in key world cities and coronavirus-related restrictions.

Sales growth was strongest in Asia-Pacific, where the recovery from the Covid-19 pandemic has been more consistent and same-store sales rose 11 per cent with “strong double-digit growth” in mainland China.

Revenue was down 8 per cent in the Americas and down 37 per cent in Europe and the Middle East, reflecting much lower tourist demand and higher levels of store closures.

Burberry said it expected a “modest increase in border trade compliance costs as well as some incremental duty under the rules of origin” as a result of the UK/EU trade agreement signed in December.

But it warned that it was “looking at ways to mitigate” the impact of the UK government’s decision to scrap the VAT retail export scheme, which allowed non-EU tourists to reclaim VAT.

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