Burberry pretax profits down 62% for first half

Burberry pretax profits down 62% for first half
The business said its first half year had been “underpinned by strong cash and cost discipline".
// Burberry saw pretax profits by more than half after impact of coronavirus
// Luxury fashion brand saw demand pick up in Q2 after store sales fell 45% in Q1
// Emphasis on digital experiences to offset impact of store closures

Burberry saw pretax profits fall by 62 per cent in the first half of its financial year to September 26, after impacts from the coronavirus restricted luxury spending.

The luxury British fashion house recorded first-half pretax profits of £73 million in the six months to the end of September, down from £193 million a year before.

Sales fell 31 per cent to £878 million, although Burberry noted it had seen a good recovery for revenue later into the first half.

Comparable store sales were down just 6 per cent in the second quarter, compared to a 45 per cent in the first quarter.

READ MORE: Burberry launches sustainability-labelled bond for first time

“Though the momentum we had built was disrupted by COVID-19 at the start of the year, we were quick to adapt, while making further progress against our strategy. While the virus continues to impact sales in EMEIA, 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,” chief executive Marco Gobbetti said.

Burberry noted that prior to closures caused by coronavirus, it had delivered double-digit comparable store sales growth, but its first half of the year began with 60 per cent of its stores closed across the globe due to the pandemic.

The luxury brand said that with ongoing restricted travel, it was looking to focus its business on “opportunities in rebounding markets, localising plans and shifting resources where needed”.

Burberry noted that it had seen digital sales increase amidst the store closures, and it had looked to accelerate this growth with immersive experiences on its websites, digital pop-ups and online brand activations.

The business said its first half year had been “underpinned by strong cash and cost discipline”, ending September with £542 million of cash net of overdrafts and borrowings and cash net overdrafts of £1,138 million.

Looking ahead, Burberry said it has been encouraged by the recovery experienced in its second quarter, but that it “remains conscious of the uncertain macro-economic environment caused by covid-19”.

“In an environment which remains uncertain, we will continue to deliver exceptional product, localise plans and shift resources, while leveraging the strength of our digital platform to inspire customers,” Gobbetti added.

The company noted that it currently has more than 10 per cent of its stores closed globally.

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