(Alliance News) - Burberry Group PLC on Friday said it was performing well prior to the onset of Covid-19, which resulted in store closures and annual profit dropping as it took impairments.
Shares in Burberry were up 3.5% at 1,422.48 pence in London on Friday, making the stock the top performer in the FTSE 100.
The luxury fashion house delivered revenue of GBP2.63 billion in the 52 weeks ended March 28 compared to GBP2.72 billion the year prior. Pretax profit dropped to GBP168.5 million from GBP440.6 million year-on-year.
Burberry highlighted that it had seen "strong" momentum in brand, product and sales before the Covid-19 outbreak, ahead of its previous expectations. Comparable sales grew by 4% in the first nine months of its financial year, but dropped by 27% in the final quarter, with around 60% of retail stores closed at end of March.
The outbreak of Covid-19 towards the end of the period impacted profitability and cash generation, it said.
The firm took GBP241 million in asset impairments resulting from the expected impact of the pandemic on future trading, with GBP157 million of this relating to store impairments and GBP68 million inventory provisions.
Burberry said it opened flagship stores in Beijing, Shanghai and Tokyo, and continued with its "refresh programme", with 64 stores now aligned to its "new creative vision". The clothing retailer also exited a cumulative 23 smaller, non-strategic stores previously earmarked for closure.
In the past 12 months, the company said it has increased the availability of new products in its mainline stores from 10% to 15% at the start of April 2019 to around 85% by the end of March 2020.
Over the last two years, Burberry said it transformed its operational efficiency, which produced cost savings of GBP20 million in its financial 2020, bringing the cumulative total to GBP125 million. As part of the company's drive to mitigate the impacts of Covid-19, Burberry said it accelerated its plans by a year and now expects to complete the full programme of GBP140 million of cumulative savings by the end of its financial 2021.
Given "current uncertainty", Burberry followed many other listed companies in skipping its final dividend, meaning its full-year payout dropped 73% to just 11.3 pence, having paid 42.5p a year earlier.
It said future dividend payments will be reviewed at the end of financial 2021.
"We have a strong balance sheet and liquidity, with space for investment when markets recover. We have found new ways to strengthen our connection with consumers, drawing on our digital leadership. We have also mobilised our resources in support of the relief efforts," said Chief Executive Marco Gobbetti.
He added: "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."
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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