Burberry has good news on sales recovery
Burberry had some unexpected positive news on Friday with an unscheduled trading update and a profits upgrade as it said sales are bouncing back.
In the wake of the pandemic, we’re more used to such updates from stock exchange-listed companies containing profit warnings, but not this time.
The luxury label, whose financial year ends later this month, said that since December, it has “continued to see a strong rebound and [we] now expect revenue and adjusted operating profit to be ahead of consensus expectations”.
What that means in numbers is that comparable store retail sales in Q4 are expected to come in at anywhere between 28% and 32% higher year-on-year.
Admittedly, that sales recovery isn’t in comparison to a ‘normal’ period for the firm. The year ago Q4 period included some impact from the pandemic with China in particular locking down quite early. Europe also mandated store closures from late February.
But this year has seen swathes of store closures too as Europe again went into lockdown late last year. And stores in the firm’s home market — the UK — have been shut all year so far in 2021. Clearly, Burberry has been able to overcome these issues and find sales growth in even the toughest conditions.
Meanwhile, for the full year, it expects group revenue to have declined by only between 10% and 11% (despite global stores closures for months on end), while the adjusted operating margin should be in the range of 15.5% to 16.5%.
It’s good news both for Burberry itself and for the wider luxury sector and suggests that a well run business should be able to bounce back from the crisis period this year, even if the all-important tourist shopping remains muted for the near future.
We’ll hear the full story when the company releases its preliminary results on May 13.
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