BRBY.L - Burberry Group plc

LSE - LSE Delayed price. Currency in GBp
1,550.00
-26.00 (-1.65%)
At close: 4:35PM BST
Stock chart is not supported by your current browser
Previous close1,576.00
Open1,543.50
Bid1,562.00 x 0
Ask1,563.00 x 0
Day's range1,540.00 - 1,576.63
52-week range1,017.00 - 2,362.00
Volume1,410,318
Avg. volume1,550,801
Market cap6.273B
Beta (5Y monthly)0.85
PE ratio (TTM)52.01
EPS (TTM)N/A
Earnings dateN/A
Forward dividend & yieldN/A (N/A)
Ex-dividend date19 Dec 2019
1y target estN/A
  • 2020 stock market recovery: I’d buy these 2 cheap FTSE 100 shares to make a million
    Fool.co.uk

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  • Disentangling the effect of Covid-19 on Burberry's share price
    Stockopedia

    Disentangling the effect of Covid-19 on Burberry's share price

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    Fool.co.uk

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    Fool.co.uk

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  • Is Now a Good Time to Spend Millions at Hugo Boss?
    Bloomberg

    Is Now a Good Time to Spend Millions at Hugo Boss?

    (Bloomberg Opinion) -- There’s a new bling king in town. From selling cut-price tracksuits and trainers at his Sports Direct shops, Mike Ashley is now accumulating a portfolio of holdings in luxury-goods brands.The British billionaire’s Frasers Group Plc said late on Friday it had a acquired an exposure worth as much as 97 million pounds ($122 million) to German fashion house Hugo Boss AG through shares and derivative positions.The interests in Boss, known for its sharp suiting, represents Ashley’s second foray into luxury goods in the past six months. In February, Frasers, which includes the Sports Direct chain, House of Fraser department stores and Flannels luxury boutiques, spent about 20 million pounds acquiring a 12.5% stake in upmarket accessories maker Mulberry Group Plc, best known for its iconic Bayswater bag.The strategy for both investments is the same; securing close commercial relationships with an investment interest. They’re meant to buttress Ashley’s goal of turning House of Fraser into the “Harrods of the high street.” While this has been much maligned, the brash retail mogul may just have his chances if the company can position itself well coming out of the coronavirus lockdown, especially with rival Debenhams Plc significantly weakened.Like Mulberry, Hugo Boss is an important brand for both House of Fraser and Flannels, which also sells Burberry and Balenciaga. The companies have worked together as commercial partners for some time.There may be reasons for striking now.Hugo Boss shares have lost half of their value in the past year, underperforming the Bloomberg Intelligence luxury peer group, and the company faces a management shake-up just as Chief Executive Officer Mark Langer’s sensible turnaround loses steam. Langer, a long-serving executive who took the top job in 2016, will leave on Sept. 30. The company said recently it was in talks with former Tommy Hilfiger Group CEO Daniel Grieder to be his successor.If Grieder is appointed, it’s not clear how he will revive Hugo Boss’s fortunes. One option could be to follow the luxury-industry trend of cutting back on distribution to retailers not considered upmarket enough for one’s brands. If Grieder were to seek to rationalize supply to House of Fraser, then Ashley, as a big holder, would be able to make his views known.Meanwhile, the Marzotto Italian textile-manufacturing family, a long-time shareholder in Hugo Boss, increased its stake from 10% to 15% in February, sparking speculation the company could be taken private. If this were to happen, Ashley would have a seat at the table too.As with his investments in high street retail, Ashley’s dabbling in luxury has been distinctly mixed. I argued in February that he couldn’t lose with the stake in Mulberry. But the British brand has since been hurt by the lockdown, and parted company with its star designer Johnny Coca, who has now joined Louis Vuitton. Shares in Mulberry have fallen 17% since Ashley took his stake.While Ashley’s interest in Boss may be strategic, it is not without risk. Hugo Boss still generates the majority of its sales from clothing, not the best place to be in a pandemic as many consumers essentially skip a fashion season. What’s more, demand for its smart tailoring in business attire may be permanently damaged by a shift to working from home. Its new management and design teams will have to work hard to offset that by accelerating Langer’s push into younger, more casual clothing, and bolstering revenue from accessories, which are proving more resilient.Ashley’s moves usually raise eyebrows, but he often takes the right strategic direction. With his attention now focused on brands that are far from cut price, Burberry Group Plc has several potentially alluring characteristics: It’s in a turnaround, its shares have dipped and it’s a Flannels favorite. The British luxury house could yet fit in Ashley’s shopping bag.But for now, he will be hoping that his timing for striking at Hugo Boss suits him better than Mulberry did.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Shares in Burberry outperform over three months
    Stockopedia

    Shares in Burberry outperform over three months

    After the turbulence that ripped through the stock market in March, shares in Burberry (LON:BRBY) have gone on to outperform. In terms of relative price streng...

  • Singapore Landlords Need a Post-Covid Remake
    Bloomberg

    Singapore Landlords Need a Post-Covid Remake

    (Bloomberg Opinion) -- Every third dollar changing hands on Singapore Exchange Ltd. is because of someone buying or selling units in a real estate investment trust. But has the city’s REIT mania gone a bit too far?  The coronavirus pandemic has raised hard questions that have only simmered under the surface until now. As an asset class, REITs have blossomed in the Asian financial center, where land is in short supply but money is abundant. Singaporeans love property, and the idea of owning units in a trust that passes at least 90% of rental income to investors has always seemed like a better alternative to parking cash in a bank account, especially in an era of near-zero interest rates. REITs also became popular because the tiny island, its Asian Tiger years well behind it, doesn’t have many opportunities at home for people to invest in growth. A budding love affair with all things digital and fintech could have infused some youthfulness into the kind of risks the mass affluent are comfortable owning. But before they could blossom, the virus came. It’s unclear if the economic destruction will destroy the fledgling startup culture by making Singaporeans “adverse to risk, and seeking the safety of ‘iron rice bowls,’” as former civil servant Devadas Krishnadas puts it. But something doesn’t seem quite right even in the world of institutionalized rent collection. Here too, the pandemic is forcing a revaluation. If a store is unable to sell because people are scared to go out or the government doesn’t want them to, is a six-month moratorium on rents fair? Owners got up to 100% property tax rebates when the disease first threatened to decimate travel and tourism, but many didn’t pass them on fully. Struggling tenants became upset, so Singapore passed a law in April, ordering commercial owners, including REITs, to pass on tax remissions unconditionally and give a moratorium(2) on rent payment if any merchant requests it. Landlords are worried. Such a deferment means a near-term cash-flow shock, future bad debts and a degrading of REIT finances that could, in their words, “destabilize the banking industry and Singapore's financial ecosystem.” Besides, doesn’t capitalism require those who can’t honor contractual obligations to make way for those who can? The “creative destruction” argument rings hollow when advanced by landlords who have no problem enjoying state support themselves. Covid-19 will go away one day, but the friction between tenants and landlords will remain. About 10,000 small and midsize tenants have come together to demand a fair tenancy law. The conflict would be productive if it led to a search for new models of risk sharing. Looking within the industry may be a good starting point. Singapore-listed Sasseur Real Estate Investment Trust owns retail outlet malls, where the likes of Burberry, Coach and Salvatore Ferragamo hawk new and out-of-season fashion. The properties are in China, and they solve a specific problem: Customers are compensated (and the retailers penalized) heavily if merchandise turns out to be fake. But as CEO Anthony Ang explains, where Sasseur truly differs from Singapore’s other institutional landlords is in its business practices. Instead of paying rent to the REIT, tenants share roughly 15% of their revenue with its Chinese parent. The so-called entrusted manager keeps some of it to run the properties, and shares a fixed sum and a sales-linked variable component with the Singapore trust to pay out to unit holders. This risk-sharing formula, which is still fairly uncommon, passed its test in the first quarter, when China took the brunt of Covid-19 closures. The variable portion of the REIT’s revenue plummeted by 55%, in line with tenants’ sales, but the fixed rental went up almost 4%, and the overall take declined by much less. Nervous investors who sold off the stock heavily in February went back in after China reopened. Sales have yet to normalize fully, but confidence is back. Can the template be copied? Large Singapore landlords like CapitaLand Mall Trust have come to the business from real estate, unlike Sasseur founder, Vito Xu, who drifted into property ownership after introducing high-end European fashion to Tier 2 Chinese cities, starting in his hometown of Chongqing. Also, Sasseur requires a natural churn: Leases accounting for 65% of revenue will expire this year, offering Xu a chance to bring in new brands to titillate the customer with constant novelty. Singapore landlords typically have three-year contracts, the time a supermarket anchor tenant needs to stabilize footfall.Even if an art house model doesn’t fit a suburban Singapore mall, carefully curating the tenant mix, and taking an interest in their success, may be the way forward. The pathogen is reshaping habits: Mundane transactions will move online, but experiential sales, including luxury and mass-market fashion, may turn physical with a vengeance. People will use shopping excursions to signal wellness — not so much to others as to their own locked-down psyches. In the post-pandemic world, Singapore REITs could more deftly stretch their profits if they stop singing from the hymn book of cutthroat capitalism and embrace a more trusting relationship with tenants. (1) The deferment is for a six-month period, which may be extended or shortened by the authorities.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Has Burberry Group got what it takes to resume its dividend payments?
    Fool.co.uk

    Has Burberry Group got what it takes to resume its dividend payments?

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  • Top British stocks for June 2020
    Fool.co.uk

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  • Burberry Group plc (LON:BRBY) Insiders Increased Their Holdings
    Simply Wall St.

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  • Luxury Trendspotting Isn't Easy in the Covid-19 Age
    Bloomberg

    Luxury Trendspotting Isn't Easy in the Covid-19 Age

    (Bloomberg Opinion) -- Almost three weeks ago, the American retailer J. Crew Group Inc. filed for bankruptcy after it fell out of fashion. But there’s one item from the once-feted store that shoppers just can’t get enough of: masks. The most recent batch of nonmedical face coverings in its signature fabrics — plain blue shirting and blue-and-white stripes — has sold out on its British website.Upmarket, stylish face coverings could provide a bit of a boost in a coronavirus-strewn landscape, where luxury goods sales are expected to drop as much as 35% this year, according to Bain & Co. estimates. To give some idea of the pent-up demand, fashion search platform Lyst said searches for masks are up 1,600% over the past month, compared with a year earlier.   That’s sparked a huge debate in the luxury industry as to whether to cash in. After all, if we’re going to have to wear masks anyway, why not make them chic?It may be tempting. At the height of the crisis, many fashion houses — including LVMH’s Louis Vuitton and Christian Dior; Kering SA’s Gucci; Prada SpA; Burberry Group Plc; and Ralph Lauren Inc. — repurposed some production facilities to make personal protective equipment for donation to medical workers on the front lines. Burberry is poised to take delivery of a special mask-making machine at its mill in Keighley, Yorkshire. But the items will be for donation, not for sale in its shops. And they certainly won’t be made out of its iconic red, white, black and tan check.While the brands have gained the requisite skills, there are considerable risks associated with turning masks into fashion statements. So far, the bling behemoths are wisely keeping a respectable social distance.If luxury goods companies were to make masks for profit, not only would they need to look stylish, but they would probably have to boast some health effectiveness, too. And they’d have to be expensive to fit with any luxury brand’s high-end prices. For example, a Louis Vuitton monogrammed mink-fur sleep mask — perfect for catching some shuteye on that first-class flight — costs 700 pounds ($859).The danger is that luxury groups would be seen as profiteering from a health-care emergency. What’s more, according to consultants at McKinsey & Co., consumers shift to more subtle “silent luxury,” rather than in-your-face bling, after a large-scale crisis with a heavy emotional toll. What is perceived as unethical behavior — or simply ugly consumerism — could turn off customers, especially younger shoppers who are particularly conscious of brands’ social values.One way to get around this would be to give a percentage of the profits to good causes, or to donate one mask for every one sold. J. Crew has donated 75,000 single-use masks to Montefiore Health System hospitals in New York.Even if the pitfalls around profiteering are surmounted, there are other perils. Luxury is about feeling good. Brands must weigh whether they want to be associated with a pandemic and its huge human and economic toll. And although masks can have replaceable filters that extend their use, it’s unlikely people will hold onto them for long. Being disposable is anathema to luxury goods, from Hermes handbags to Cartier watches, for which heritage is crucial.That doesn’t mean face coverings won’t work for some brands. For example, Off-White, the streetwear label from DJ and designer Virgil Abloh, who is also the artistic director for Louis Vuitton’s menswear, has been producing masks for some time. Off-White’s $95 arrow-logo face mask was the most in-demand men’s fashion item in the first quarter, according to the Lyst index, which measures clothing and accessories searches on its own site, Google and other social media.Streetwear masks, along with heavy boots and multi-pocket coats, are part of an apocalyptic look that began to emerge before Covid-19. Serving to partly conceal one’s identity and repel other urban hazards like pollution, masks are a good fit with younger, edgier brands, such as the aptly named Anti Social Social Club. That’s not the case for traditional luxury.Consequently, the big fashion houses would be better off focusing their attention on items that can be accessorized with masks, or adapting products to changing needs. Luxury resale site Vestiaire Collective saw a 45% increase in orders for scarves, including Hermes’s classic silks, in the last week of March, compared with the previous seven days, and demand has remained elevated. Brands could experiment with supersized sun visors to ensure social distancing or extended collars that could double as face coverings.As the world emerges from the pandemic, and things become less emotionally charged, consumers may give luxury brands more permission to sell them protective clothing. For now, any move to do so will likely be a one-off to grab attention on the catwalk or Instagram. The pop star Billie Eilish, for one, donned a Gucci custom double-G-emblazoned mask for the Grammy Awards in January. While Gucci’s decision not to commercialize the product means passing up millions of euros of sales, it’s the right call.  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Burberry pulls dividend as luxury takes 'time to heal'
    Reuters

    Burberry pulls dividend as luxury takes 'time to heal'

    Britain's Burberry said the luxury fashion industry would take time to recover from the profound impact of the coronavirus outbreak that lowered its comparable sales by 27% in the final quarter and led it to scrap its final dividend. Shares in Burberry rose 2.6% at 0950 GMT as the sales fall was less than the 31% expected by analysts. Chief Executive Marco Gobbetti said Burberry had been making progress in repositioning its brand before the "profound impact" of the novel coronavirus.

  • Coronavirus Will Change Not Just How, But What, We Buy
    Bloomberg

    Coronavirus Will Change Not Just How, But What, We Buy

    (Bloomberg Opinion) -- As the coronavirus pandemic continues, Bloomberg Opinion will be running a series of features by our columnists that consider the long-term consequences of the crisis. This column is part of a package envisioning a new consumer economy. For more, see Mary Duenwald on technology changing how we shop and on how consumers respond to crises, and Tara Lachapelle on fixing the broken business model of streaming.During the coronavirus lockdown, a particular meme has been doing the rounds on Instagram and Twitter.It shows a woman in a pink ballgown, complete with tulle train billowing out behind her. She’s not reaching for a cocktail or standing on a glitzy red carpet. She is in a supermarket produce section, clutching a bunch of carrots in one hand and reaching for a red pepper with the other.The image encapsulates how some consumers feel: After being cooped up at home for months, they can’t wait to finally have an opportunity to get all dressed up again.But for many others, what they wear, how they shop and which products they buy will be forever altered by the pandemic. The Covid-19 outbreak, which has tragically infected more than three million people and killed more than 219,000, has also struck at the heart of consumerism around the world.With a quarter of a million stores closed across the U.S. at the height of the lockdown, according to research group GlobalData, the ability to purchase, long a symbol of affluence and status, is in peril. Never has materialism seemed so emasculated.First of all, there’s the immediate economic impact. With millions of workers temporarily furloughed and laid off, they will be reining in their spending. If these become permanent job losses, the effect will be even more severe. Conspicuous consumption is going to look ugly for a while.And habits learned in lean times often stick around. Witness the acceptance of discount retailers, such as the German no-frills supermarkets Aldi and Lidl. The cash-strapped middle classes in the U.S. and Europe discovered the delights of their cheap wine and value toilet paper during the 2007-2008 global financial crisis, and the budget grocers have prospered ever since.Then there’s the slow and incremental process of coming out of lockdown. Even individuals who have kept their jobs and full salaries may make longer-term changes to their spending, as it will be some time before they feel comfortable visiting crowded malls and dining out in restaurants again.With social distancing potentially staying in place for up to two years, according to KPMG, this could mean far-reaching consequences for the operation and physical design of stores. For example, stores might have to require appointments for visits, offer more check-out free locations and even rethink facilities such as changing rooms. Who wants to pick up discarded garments when the world is emerging from a pandemic?So far, there are some encouraging signs coming from China, where consumers emerging from lockdown seem to be embracing shopping once more. PwC estimates that as of early April sales at non-food retailers were at 50-80% of their pre-crisis levels. In luxury, the recovery has been even more extreme: A Hermes International flagship store took in $2.7 million when it reopened in Guangzhou in mid-April, believed to be a record daily haul for a boutique in China, according to fashion trade bible WWD. LVMH said some of its big brands on the mainland had seen 50% increases in sales in April compared to the previous year.This phenomenon is being called “revenge spending,” a phrase first coined to capture the desire for consumer goods unleashed in China during the 1980s, after the poverty and chaos of the Cultural Revolution. At the moment, Chinese shoppers are flush with cash after cancelled travel and events. However, this demand may not last, especially as the number of people allowed in boutiques at any one time is limited and initiatives such as temperature testing have been put in place.The bigger impact of this crisis, then, may be a shift in what consumers choose to buy.*****The outbreak has hit something we largely take for granted: our health. While more government resources are directed to healthcare — something that will have implications for taxes and disposable incomes — there will also likely be a reassessment of personal priorities. That could mean spending even more of one’s income on private health insurance or buying products that help boost immunity.Wellness had already become one of the few rich seams for consumer groups, giving rise to Beyond Meat Inc.’s plant protein burgers, South Korean gold-laced face masks and vitamin infusions sold in upmarket department stores. Despite criticisms that so-called self-care is the expensive preserve of millennial hipsters, society’s desire to ensure it doesn’t get sick will likely turbo-charge demand for these products.The pandemic has also fostered a renewed sense of community. This plus the inability to travel very far could encourage spending in more local shops and on brands with strong regional identities, as opposed to the big retailers who may have had empty shelves or struggled to deliver online orders during the crisis. Underlining the new mood, one British retailer with a long history of trading on the high street told me they’ve even noticed more customers saying thank you to staff in their daily interactions.  One sector that is poised to suffer tremendously going forward is clothing. Most consumers have effectively skipped a fashion season, being unwilling or unable to buy apparel for spring and summer. Conferences, parties and weddings have been cancelled, so we’ve simply needed fewer new clothes. There may be some pent-up demand when consumers rediscover their freedom, especially if retailers are having to cut prices to clear stock. But for many, essential grooming such as getting a haircut or a fresh set of eyelash extensions will take precedence over buying a new outfit.Some consumers who bought fewer clothes during this period may continue to reduce their wardrobe spend. The size of the average U.S. closet has already shrunk over the past three years, according to GlobalData. If you combine the pandemic and concerns about fashion’s environmental cost, it’s not hard to see how men and women may buy even less apparel in the future.During the prolonged shutdown, there will be some retailers that consumers simply don’t miss and therefore may not return to. U.S. department stores, such as Macy’s Inc. and J.C. Penney, already grappling with the shift toward online buying and with few compelling products, may well fall into this category. J.C. Penney skipped a $12 million interest payment and is evaluating alternatives including a potential bankruptcy filing to restructure its finances, Reuters reported recently. Macy’s, meanwhile, is exploring ways to use its real estate to secure fresh cash. Indeed, some storied names may shut their doors forever, or decide that the time is right to close a number of locations.  How brands behave when the chips are down will also determine how customers react to them when they come out of lockdown.Some have acted particularly well, adapting their offerings to meet changing needs. For example, luxury goods groups, including LVMH, Kering SA, Prada SpA, Burberry Group Plc and Ralph Lauren Corp, repurposed their facilities to produce protective equipment such as hand sanitizer, masks and gowns. Brands like Nike and Lululemon have engaged shoppers with online workouts; while British clothing and food retailer Marks & Spencer Group Plc. has offered meditation sessions. This nimbleness won’t be forgotten.*****Whether out of necessity or choice, shoppers will want goods that are appealing — and, after a health scare, make them feel good — but are priced at a level they believe is appropriate. This doesn’t always mean the cheapest, but it does mean a perceived sense of good value for money. That’s at odds with the approach of higher initial prices followed by steep markdowns that has become a hallmark of much U.S. retail. But as customers become more discerning, store groups will need to distinguish themselves with more than just discounts.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Here's Why Burberry Group (LON:BRBY) Can Manage Its Debt Responsibly
    Simply Wall St.

    Here's Why Burberry Group (LON:BRBY) Can Manage Its Debt Responsibly

    Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

  • What to watch: Burberry donates 100,000 pieces of PPE, Sports Direct resolves tax dispute, and stocks fall
    Yahoo Finance UK

    What to watch: Burberry donates 100,000 pieces of PPE, Sports Direct resolves tax dispute, and stocks fall

    A daily overview of the top business, market, and economic stories to watch in the UK, Europe, and abroad.

  • Burberry will not take British state crisis cash to pay staff
    Reuters

    Burberry will not take British state crisis cash to pay staff

    Luxury brand Burberry will pay all its staff globally even if they are unable to work due to coronavirus crisis store or site closures, adding on Friday it will not tap a government support scheme in Britain. With Britain in a pandemic lockdown many retailers, including Marks & Spencer, Next and Philip Green's Arcadia group, have taken advantage of the state job retention scheme, which sees employees paid 80% of their salary. The 164-year-old Burberry, which warned last month its fourth quarter sales would fall 30%, said it was continuing to reduce spending on non-essential areas.

  • When Should You Buy Burberry Group plc (LON:BRBY)?
    Simply Wall St.

    When Should You Buy Burberry Group plc (LON:BRBY)?

    Burberry Group plc (LON:BRBY), which is in the luxury business, and is based in United Kingdom, received a lot of...

  • 'More Burberry gowns to come': luxury brand turns effort to coronavirus fight
    Reuters

    'More Burberry gowns to come': luxury brand turns effort to coronavirus fight

    High-end British fashion brand Burberry <BRBY.L> has turned over its production to make protective gowns for healthcare workers tackling the coronavirus outbreak, health minister Matt Hancock said on Friday. Burberry has said its sales in the final weeks of March would plunge by up to 80% as the impact of coronavirus already seen in China spread to Europe and the United States, causing stores to close and luxury shopping to dry up. Asked during a news conference about supplies of personal protective equipment, something many healthcare workers have complained there is not enough of, Hancock said Burberry had turned over its production to make gowns.

  • Reuters - UK Focus

    "More Burberry gowns to come": luxury brand turns effort to coronavirus fight

    High-end British fashion brand Burberry has turned over its production to make protective gowns for healthcare workers tackling the coronavirus outbreak, health minister Matt Hancock said on Friday. Burberry has said its sales in the final weeks of March would plunge by up to 80% as the impact of coronavirus already seen in China spread to Europe and the United States, causing stores to close and luxury shopping to dry up. Asked during a news conference about supplies of personal protective equipment, something many healthcare workers have complained there is not enough of, Hancock said Burberry had turned over its production to make gowns.

  • Retailers Start Usefully Quantifying Virus Impact
    Bloomberg

    Retailers Start Usefully Quantifying Virus Impact

    (Bloomberg Opinion) -- As measures to curb the coronavirus heap pressure on the global retail sector, observers have struggled to quantify the economic ramifications. There are signs that affected companies are offering some useful disclosure that may in turn help sentiment. Adidas AG last week outlined a roughly $1 billion reduction in first quarter sales and $500 million impact on operating profit, but that was before many countries outside Asia started taking aggressive steps in response to the crisis.Now Next Plc has provided more expansive detail about how it sees the months ahead. With shares in most retailers in freefall – Next is down about 40% this year – investors needed to hear something constructive. While the U.K. fashion chain said it could not give guidance for the full year, it has produced a stress test that outlines potential outcomes.In a worst-case scenario, full-price sales would be down by about 1 billion pounds ($1.16 billion), a quarter of its total, which would mean pre-tax profits of just 55 million pounds for the financial year (against 729 million pounds in the year earlier).The company has also set out how it might cope with the crisis financially, given the possibility of extended store closures. It could suspend buy-backs and dividends, delay capital expenditure, sell and lease a warehouse and partly securitize customer debts. Pulling these levers could provide an extra 835 million of cash. Bringing forward its forthcoming sale, and pushing back deliveries of stock would free up another 100 million pounds.These projections exclude any use of government lending or measures to help pay wages, and Next is conservatively assuming no rent reductions from landlords.This disclosure dashboard sets a good example for others to follow. But Next can afford to be upfront with its investors. It is one of the strongest retailers in the U.K. sector.Similarly, Burberry Group Plc provided some near-term clarity, warning that fourth-quarter comparable sales in its stores would be down by 30%, with a 70-80% decline in the final weeks through to its March 31 financial year-end. Like Next, the luxury group has a strong balance sheet, with the company forecasting a cash balance of 600 million pounds before lease obligations.It is understandable why weaker chains may be less willing to quantify the impact on their businesses. But their investors will expect a similar assessment of possible scenarios. And larger, well-resourced chains have no such excuse for not saying more.Take Inditex SA, the world’s biggest clothing retailer. It said the outbreak had cut its sales by 24% between March 1 and March 16. But it didn’t outline the potential full-year impact. This is from a company with record net cash of 8.1 billion euros ($8.7 billion) at January 31.There will be many more tough announcements over coming weeks as retailers and restaurants outline the financial cost of what is happening now. But even if they can’t make exact predictions, they should learn from Next’s example and aim to at least give the market a toolkit for understanding the resilience of their business. Next shares’ strong gain in a falling market on Thursday suggests transparency is rewarded.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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