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Burberry expects 30% drop in sales

Mar 27, 2020 United Kingdom
Burberry expects 30% drop in sales
The British-based luxury brand is already forecasting the hit from the impact of the Covid-19 pandemic. Burberry announced it is expecting a 30% decline in sales for the first quarter of 2020
“Since our February update, the material negative effect of Covid-19 on luxury demand has intensified and is now impacting the industry in all regions. Our primary concern is the global health emergency and we continue to take every precaution to help prevent the spread of the virus and ensure the safety and wellbeing of our employees, partners and customers. We are implementing mitigating actions to contain our costs and protect our financial position, underpinned by our strong balance sheet. We remain confident in our strategy and the strength of our brand and I am exceptionally proud of our teams’ resilience and commitment”, commented Marco Gobbetti, Chief Executive Officer.

As the brand approaches the end of financial year 2020 (28th March 2020), a forecast on sales was shared with the market: since the 24th of January 2020, trading has deteriorated significantly with comparable retail store sales tracking between -40% and -50% over the last six weeks. "As we set out in our announcement on 7 February 2020, our sales losses in February were predominantly in our Asian markets. While trading in Mainland China has started to improve with the reopening of most of our stores, sales in EMEIA and the Americas have fallen materially in recent weeks. More than 60% of our stores in EMEIA and around 85% of our stores in the Americas are currently closed with those still open operating with reduced hours and with very weak footfall. In total, around 40% of our directly operated stores globally are closed with additional closures expected over the coming days".

Given the escalation in travel and social restrictions and the inevitable impact this will have on demand, Burberry is now expecting comparable retail store sales in the final weeks of the year to be within the range of -70% to -80%. As a result, quarter 2020 comparable retail store sales should present growth rates of around -30%.

Image credits: Sai De Silva on Unsplash

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