LONDON, Jan 20 — Burberry stuck to its full-year goals today after a media campaign fronted by high-profile English football star and social justice advocate Marcus Rashford drew a younger clientele to the British luxury brand.
Higher full-price sales would boost annual margins and Asian demand remained strong, Burberry said, while warning that it could suffer more sales disruption from Covid-19 lockdowns.
Manchester United striker Rashford, 23, has won plaudits for his campaign to help ensure that poorer children do not go hungry with schools closed during the pandemic.
A first coronavirus wave last year cut Burberry’s sales by as much as 45 per cent before a bounce back on strong demand in mainland China and South Korea, which continued in the last few months.
Shares in Burberry were up five per cent to 1,825 pence at 0905 GMT, with Citi analysts saying that improved sales quality from fewer markdowns would drive full-year consensus upgrades.
Burberry’s nine per cent sales decline in its third quarter was worse than the 6 per cent fall in the second, and the company said that 15 per cent of stores were currently closed and 36 per cent operating with restrictions as a result of measures to curb Covid-19’s spread.
“We expect trading will remain susceptible to regional disruptions as we close the financial year,” Burberry said, adding that it was confident of rebounding when the pandemic eases given the brand’s resonance with customers.
In the third quarter, comparable store sales in Europe, the Middle East, India and Africa declined 37 per cent, hit by shops shut in lockdowns and a lack of tourists visiting Europe, but in the same period, it posted sales growth of 11 per cent in Asia Pacific.
Burberry said that Britain’s new relationship with the European Union would cause headwinds, warning of a modest increase in costs to comply with new rules and also the impact of an end to a scheme for VAT refunds for non-EU tourists.
This would make Britain a less attractive destination for luxury shopping when tourism returns after the pandemic, Burberry said, adding that it would try to mitigate the effect. — Reuters
