Burberry sales show signs of recovery

Burberry returned to growth in October, indicating that the luxury brand is recovering from the impact of the Covid-19 pandemic, with like-for-like store sales falling by less than expected in the previous quarter.
Burberry has made its most iconic products in Castleford and Keighley in Yorkshire for over 100 yearsBurberry has made its most iconic products in Castleford and Keighley in Yorkshire for over 100 years
Burberry has made its most iconic products in Castleford and Keighley in Yorkshire for over 100 years

The firm, which has made its most iconic products in Castleford and Keighley in Yorkshire for over 100 years, reported revenue of £878m in the six months to September 26, down 31 per cent on a year earlier, but better than analysts had predicted.

Analysts had expected comparable sales to fall by 12 per cent in the second quarter, but Burberry said the drop was only 6 per cent and it has seen strong double digit growth in mainland China, Korea and the US in the period.

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Burberry said normal production continues at Castleford although it is not up to full capacity.

The firm said social distancing and enhanced health and safety measures are in place. They include amended shift patterns to support operational needs, non-contact temperature checks and Covid-19 testing on site.

The firm has also implemented staggered start/break times, 2m distancing and managed walkways around the factory, to avoid any cross-over of its teams.

PPE and sanitising stations have been provided as well as frequent deep cleaning. The firm also said that detailed health and safety briefings are in place for every shift and it has implemented ongoing health surveillance and repurposed its cell layouts to allow for social distancing compliance.

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At Burberry Business Services in Leeds, teams who have been working from home are continuing to do so and the office is open for people whose roles cannot be performed remotely.

The firm said it has taken all necessary steps to create a Covid-secure work environment, in line with Government and health authority guidelines. It added that employees’ safety and wellbeing remains its utmost priority. Burberry said this remains an evolving situation that requires constant monitoring and adaptation.

There was no update on the sale of the 10 acres of land Burberry owns in Leeds next to the Grade I listed Temple Works building, which was put up for sale last year after Burberry decided the land is not suitable for its development plans.

Burberry’s chief executive, Marco Gobbetti, said: “While the virus continues to impact sales in EMEIA (Europe, Middle East, India and Africa), Japan and South Asia Pacific, we are encouraged by our overall recovery and the strong response to our brand and product, particularly among new and younger customers.”

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The firm said that adjusted operating profit fell 75 per cent to £51m.

Although more than 10 per cent of its stores were closed globally following new lockdowns in Europe, it said it was attracting new and younger consumers.

Burberry said that as a result it had decided to reduce markdowns.

Interactive investor’s head of markets, Richard Hunter, said that Burberry still has a chequered outlook as the pandemic continues, but that it has made progress recently.

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“A vastly improved second quarter improved the overall half-year numbers, where store sales and revenues exceeded expectations, but this was not enough to repair the damage which had already been caused,” he said.

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