Burberry shares (LON:BRBY) gained on Friday as the luxury brand said they were experiencing a bounce back in demand from key Asian markets.
“It will take time to heal but we are encouraged by our strong rebound in some parts of Asia and are well-prepared to navigate through this period. Now, more than ever, our strategy to secure our position in luxury fashion is key,” said Marco Gobbetti, Chief Executive Officer of Burberry.
Burberry shares were over 2% stronger in early Friday morning trade, one of the few shares up on the day as the FTSE 100 fell 1.76% to 5,909.
The comments from the CEO were released in the group’s preliminary 2020 results, in which pro forma revenue in the 52 weeks to 28th March fell 3% to £2,633m.
The 3% drop in revenue could be seen as a relatively positive result, given 60% of stores were closed at the end of March due to coronavirus with comparable Q4 sales falling 27%.
The drop in sales in Q4 offset what had been a strong year for Burberry having seen double digit growth in their new collections.
However, the uncertainty surrounding COVID-19 was enough to push the board in the direction of many other FTSE 100 companies and cut their dividend to help strengthen the balance sheet.
“With these results, it comes as no surprise that, hoping to ensure liquidity, the company has decided to pull its dividend and review future pay-outs at the end of its 2021 year,” said Russell Pointon, Director & Head of Consumer at Edison Investment Research.
“Prior to the pandemic, Burberry, began to focus on leather goods and accessories in a bid to diversify their brand towards more resilient and growing sectors in the market and that has helped them navigate the current landscape. Although, they´ve had to put a hold on their plan to revive sales with star designer Ricardo Tisci, the opening of stores mainly in Asia should provide some comfort and hope for the company.”
“With much of the world still in lockdown, and hence no open shops, turbulent times still lie ahead for Burberry. Nevertheless, given its strong online offering as well as diversification of products, it will be interesting to see if consumers will continue buying online or potentially holding off from luxury during the coming months.”