Burberry sales drop as new coronavirus lockdowns keep shoppers home

Burberry Group Plc sales slid as the British fashion brand suffered from a new wave of lockdowns at the end of last year. Comparable retail sales were down 9% in the three months through December. Analysts had expected an 8% drop.

The update shows how 2020 kept challenging luxury companies with on-off policies that closed, then opened and then closed retailers again from October in many European countries. The measures are particularly disruptive since the industry still sells the bulk of its products in stores, with sales teams catering closely to customers’ needs, an experience that’s not as easy to replicate online.

Burberry shares rose as much as 3.2% in early London trading, though they’re down 22% over the past 12 months. Analysts at Morgan Stanley cited gains in full-price sales as the company moves to curb discounting and elevate its image.

Burberry’s performance was mixed geographically: The appetite of shoppers in Asia Pacific was strong with 11% growth but Europe, the Middle East, India and Africa saw a 37% deceleration, mainly hurt by the lack of tourists. The Americas also saw an 8% revenue decline, according to a statement Wednesday.

New Variants

The company said 15% of its stores are currently closed, with more than one-third operating on reduced hours. Burberry warned of “headwinds” for the current quarter, with considerable uncertainty over regional patterns in the pandemic amid the spread of more transmissible virus variants.

Although there are hopes the fast vaccine rollout in the U.K. will give it higher chances of managing the pandemic, the nation still entered a third lockdown this month which led footfall on shopping streets to “fall like a cliff,” according to Niraj Shah, European economist at Bloomberg Economics. In China, a virus resurgence is threatening consumer demand during the crucial Lunar New Year holiday.

China has been the luxury industry’s bright spot since the start of the pandemic. With Chinese consumers unable to travel abroad, many splurged on luxury items in their home market. Burberry has been active when it comes to luring those shoppers. In July, it opened a new concept store in Shenzhen backed by Tencent technology which blends physical and digital experience.