Burberry, hit hard by the pandemic, scraps its dividend
The luxury fashion brand saw its sales drop by 27% in the final quarter
London — Britain’s Burberry has said the luxury fashion industry will take time to recover from the profound impact of the coronavirus pandemic that lowered its comparable sales by 27% in the final quarter and led it to scrap its final dividend.
The company, famous for its trench coats and trademark check, said the dividend cancellation will save about £120m to help it through the crisis and it will review the payout at the end of its 2021 year.
Shares in Burberry rose 2.6% at 9.50am GMT as the sales fall was less than the 31% expected by analysts.
CEO Marco Gobbetti. on Friday, said Burberry had been making progress in repositioning its brand before the “profound impact” of the novel coronavirus. “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.”
Burberry, in common with other high-end labels, saw the effect of the pandemic in late January when sales in China started to shrink. As the coronavirus spread, Burberry suffered significant losses in Europe and North America in March.
CFO Julie Brown said Asia is recovering, with sales in mainland China and South Korea ahead of the prior year and showing an improving trend. For the wider region, including Hong Kong, which is reliant on Chinese tourists, the picture is mixed, she said, while trading in the rest of the world has been hobbled.
“Half our stores are currently closed, and we expect our first quarter to be severely impacted, with store closures likely to be at or near their peak for most of the period,” she said, adding that Burberry has shifted inventory to online channels and to stores in Asia that have reopened.
The company took a £68m charge for inventory, part of £243m in crisis-related charges.
Revenue was £2.63bn, down 3%, and adjusted operating profit was £404m, down 8% at constant exchange rates, for the year to March 28.