Burberry has scrapped its full-year dividend cost to shareholders as gross sales plunged 27% in its fourth quarter due to the Covid-19 lockdown.
The posh British model, greatest identified for its trenchcoats and signature test, stated it was cancelling its end-of-year cost to shareholders, price about £120m final yr, and had borrowed £300m through the UK government-backed enterprise assist scheme after the gross sales stoop within the three months to 28 March.
Pre-tax income slumped 62% to £169m within the yr to 28 March after the corporate stated it was making a £241m one-off provision associated to the coronavirus disaster together with £68m associated to inventory, which will probably be offered at a hefty low cost and an £157m writedown on the worth of its 465 shops due to poor buying and selling.
The corporate stated it was sticking to its dedication to not burn unsold inventory and can be clearing extra product by transferring it to components of the world the place shops have been now buying and selling and thru on-line reductions, pattern gross sales for workers and recycling.
Burberry stated it couldn’t predict gross sales and income for the yr forward as it will take a while for luxurious purchasing to return to regular ranges internationally within the gentle of the pandemic.
“The virus has clearly modified the world and the best way individuals conduct their lives. There will probably be important strain on the luxurious shopper. Social distancing will inevitably decelerate financial commerce,” stated Julie Brown, the chief working and monetary officer.
The corporate stated that half of its shops have been at the moment closed and buying and selling within the three months to the top of June was more likely to be “severely impacted”.
Gross sales fell 3% to £2.6bn for the yr after Burberry was compelled to shut nearly all of its shops in mainland China in February, whereas those who remained open operated with lowered hours and had “important declines” in customer numbers.
Buying and selling was additionally affected by closures in Europe in March and disruption from months of protests in Hong Kong, the place gross sales fell 40% for the yr.
Burberry stated it was reviewing its retailer property in Hong Kong as Brown stated it was clear that vacationer locations, in Asia and Europe, have been more likely to have fewer guests in the intervening time.
Chinese language customers account for 40% of Burberry’s gross sales and normally spend half of their cash overseas however Brown stated they have been now extra possible to purchase domestically.
She stated on-line purchasing and digital communication with customers would even be extra essential, and Burberry’s funding in these areas meant it was properly positioned to deal with the present atmosphere.
The corporate stated buying and selling in China began to enhance in March and it had reopened all shops there however the variety of customers about in different components of Asia, together with Hong Kong, was nonetheless considerably decrease than regular.