British luxury group Burberry (BRBY.L) warned on Thursday that sales have collapsed almost 50% over the last six weeks, as the novel coronavirus became a pandemic.
Burberry said sales at its stores around the world were down between 40% and 50% since 24 January. 40% of Burberry’s stores worldwide are also now closed due to Covid-19. The company expects more to shut in the coming days.
Sales could fall by as much as 80% as a result of more closures and Burberry told investors sales for the current quarter would likely slump by 30% compared to last year.
The warning comes after an update last month when Burberry said it had been forced to shut stores in China and Hong Kong.
“Since our February update, the material negative effect of COVID-19 on luxury demand has intensified and is now impacting the industry in all regions,” Marco Gobbetti, Burberry’s chief executive officer, said in a statement on Thursday.
“We are implementing mitigating actions to contain our costs and protect our financial position, underpinned by our strong balance sheet. We remain confident in our strategy and the strength of our brand and I am exceptionally proud of our teams' resilience and commitment.”
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “There are some glimmers of good news. Chinese sales are recovering after stores reopened – although we suspect the bounce back will be slow.
“The balance sheet still looks pretty healthy with plenty of cash and borrowing facilities available, helping the group to weather a downturn.”
Burberry said it had £900m of cash and credit to draw on if needed.
“The key question for investors is how long will the current lockdowns last?” Hyett said. “That’s an unknown and the longer this drags on the more permanent the damage will be.”
Shares in Burberry were flat.