Britain's Burberry warned that sales in the final weeks of March would plunge by around 70 per cent to 80 per cent compared to last year, as coronavirus caused shops to shut and demand for luxury goods to dry up.
Burberry said on Thursday it expected sales at comparable retail stores in the final weeks of its financial year to March 28th to be down between 70 per cent and 80 per cent, and as a result it expected overall fourth quarter sales to be 30 per cent lower.
The forecast for March showed that the impact of coronavirus was intensifying, with sales dropping off further from a level of being down 40 per cent to 50 per cent over the last six weeks.
The company, famed for its trench coats and check scarves, did not provide profit guidance, but said it remained confident in its strategy and was ready to respond to any recovery in luxury demand.
It said it had £600 million of cash and a £300 million revolving credit facility, and was working to cut costs to help maintain a strong financial position.
“We are implementing mitigating actions to contain costs and protect our financial position, including renegotiating rents, restricting travel and reducing discretionary spending,” Burberry said in a statement.
Burberry had in February already warned about the impact of coronavirus on its business, as Chinese spending globally accounts for 40 per cent of its retail sales, and closed shops in China at that time plus fewer Chinese tourists abroad hit sales.
Trading in China has started to improve in recent weeks, Burberry said, as its shops there had started to reopen.
Separately, British clothing retailer Next said the industry faced an unprecedented crisis due to coronavirus outbreak but said its balance sheet and margins would help it weather the storm.
The group, which has about 700 stores, with about 500 of those in Britain and Ireland, and also operates its online Directory and catalogue business, said it was preparing for a significant downturn in sales during the coronavirus crisis.
It said total brand sales fell 8.8 per cent in the week commencing March 8th and were down 30 per cent from March 15-17th.
Next said that, given the unprecedented nature of the crisis, it could not predict the extent of the impact on its retail and online sales.
It said its stress test showed the business could comfortably sustain the loss of more than £1 billion (€1.06 billion), or 25 per cent, of annual full price sales, without exceeding its current bond and bank facilities.
Next said its priorities were to keep its workplaces and shops as safe as possible for customers and staff, securing the cash resources of the business and developing its online platform and product ranges throughout the next six months. – Reuters
