Burberry Q1 comparable sales down 45 percent

Comparable sales at Burberry declined 45 percent in Q1, easing to negative 20 percent in June, while growth in Mainland China and Korea in June was ahead of pre Covid-19 levels. Total sales for the quarter declined by 48 percent to 257 million pounds.

“In Q1, sales were severely impacted by the drop in luxury demand from Covid-19 and we expect it will take time to return to pre-crisis levels with the resumption of overseas travel. We are encouraged by the improving trends in all regions and the promising exit rate for June. We saw an excellent response to new product launches in recovering economies as well as online. Demand for leather goods was particularly strong in Mainland China and Korea, bringing new, younger luxury customers to the brand,” said Marco Gobbetti, Chief Executive Officer of Burberry Group plc.

Burberry to cut 500 jobs

The company also said it would be cutting around 500 jobs, or around 5 percent of its workforce. In the UK the changes would affect office-based roles and would impact roughly 150 roles out of more than 3,500. It would not affect retail or manufacturing teams. The company added that it is too early to give an exact number.

Burberry reports decline in Q1 sales across markets

The company said, Asia Pacific declined 10 percent in the quarter but returned to growth in June. Within this, Mainland China grew mid-teens in Q1 but grew ahead of the January pre Covid level of 30 percent in June, supported by some repatriation of sales due to the Covid-19 travel restrictions.

EMEIA declined around 75 percent, impacted by lockdown measures and a significant reduction in travel. June sales improved but continued to be impacted by a significant headwind due to tourist flows. The Americas declined 70 percent, however, Burberry added that following the easing of restrictions, trends have improved significantly into June.

All product trends were negative during the quarter, impacted by Covid-19 related store closures.

Burberry expects Covid-19 impact to continue in Q2

The company further said that throughout Q1 2021 COVID related government restrictions eased allowing the gradual reopening of retail store network from peak closures at the end of March. This underpinned a progressive improvement in comparable retail sales growth with June declining around 20 percent compared to a 45 percent decline for the total quarter.

Looking ahead, in the absence of full year guidance due to the macroeconomic and global health uncertainty, the company believes that the second half, and the course of the pandemic from here, will largely depend on the actions governments pursue to control the spread of the virus as economies restart, including their responses to second viral waves, as well as the phasing of store re-openings, an easing of travel restrictions, and the on-going consumer response.

Burberry expects the second quarter to continue to be materially impacted by the pandemic. Based on comp retail sales performance in June 2020, the company expects Q2 2021 to decline by 15 percent to 20 percent. In wholesale, H1 2021 sales decline is anticipated to be around 40 percent to 50 percent and gross margin to decline by around 200bps to 300bps year-on-year and operating expenses to reduce by a mid-teens percentage compared to last year.

Photo courtesy of the brand