Burberry predicted it would take several years for long-haul travel to recover from the coronavirus pandemic with the absence of wealthy tourists a severe blow to its UK shops.
In normal times a shopping trip to Burberry is on the itinerary of international visitors but the hiatus caused by Covid-19 meant the luxury retailer’s sales in Europe, the Middle East and Africa were down 44% on 2019 levels in the year to 27 March 2021.
Julie Brown, Burberry’s chief operating and financial officer, said despite the easing of lockdown restrictions it was still a “very, very, muted” travel picture. “The UK was previously highly dependent on the traveling consumer,” she said. “It was approximately about two-thirds of our business prior to Covid, so a very material impact on the UK.
“We are starting to see some local travel in Asia and, prior to this recent outbreak, travel resuming in Europe but I think long-haul travel will take some time to return. We certainly see that being a couple of years away.”
But with sales rebounding in other markets, particularly within the Asia-Pacific region where they finished up 17%, overall sales fell 11% to £2.3bn. Adjusted underlying profits declined 9% at £396m, with the company reinstating its dividend at the same level as in 2019.
The shares were the biggest faller in the FTSE 100, down 8% at £19.38. Richard Hunter, head of markets at interactive investor, said Burberry had put a “tough year behind it”. The return of the dividend showed “management confidence”, he said, with the share price reaction likely reflecting profit-taking by investors after a gain of 52% over the past year.
The update came as chief executive, Marco Gobbetti, declared the first phase of his revamp of the British label, best known for its trenchcoats and signature check, was complete. In 2018, he embarked on a plan to move the brand upmarket into the same orbit as Gucci and Dior.
That year, Riccardo Tisci, the former Givenchy designer replaced Burberry’s longstanding creative supremo, Christopher Bailey. Tisci’s collections designs, as well as advertising featuring people such as the Manchester United footballer Marcus Rashford, were attracting new and younger customers, it said.