Luxury goods group Burberry said that sales in China and South Korea had bounced back from the worst damage inflicted by coronavirus, offering some encouragement for an industry hit hard by the pandemic.
Sales in both countries in the current financial year were “already ahead of the prior year and continuing to show an improving trend”, the UK retailer said as it published annual results on Friday.
Both countries are key markets for Burberry and were among the first to pass the peak of the Covid-19 pandemic.
However, the company cautioned that a robust rebound in China benefited from "repatriation spend" because Chinese consumers were no longer able to shop abroad, including in Hong Kong.
"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," said Marco Gobbetti, chief executive.
As parts of China were ravaged by coronavirus in the early part of the year, Burberry warned in February that the damage to its business was more significant than that caused by the civil unrest in Hong Kong. The group has more than 60 stores in China.
The company said on Friday that it had taken a £68 million charge against the value of inventory that is now likely to be sold at a discount, and a further £157 million (€175 million) against the carrying value of its store estate.
The company did not declare a dividend for the financial year that ended in March, when sales fell 3 per cent to £2.63 billion. Operating profit before one-off items was £433 million, little changed from last year but ahead of most analysts’ forecasts.
Free cash flow, however, contracted sharply to £66 million from £301 million last year.
Shares in Burberry were up 1 per cent in early trading on Friday. – Copyright The Financial Times Limited 2020