British luxury apparel company Burberry has unveiled its economic results for the fiscal year ending 2021/2022 and is banking on the recovery of its business in China to improve its outlook for the year 2022.
For the 2021/2022 fiscal year ended April 2, the British label announced that it had achieved a turnover of £2.826 billion (€3.338 billion), up 21% on the previous year. Its operating profit reached 543 million pounds, or approximately 641 million euros, an increase of 32%. For the first quarter of 2022 (January to April), sales increased by only 7%.
This slow growth can be explained by the health restrictions still in place in China because of the Covid-19 pandemic, its largest market. Burberry CFO Julie Brown said that sales in China, which accounted for about 30% of the group’s revenue last year, fell 13% in the last quarter after the closure of some stores in China and the disruption of online shopping since March.
Indeed, due to the Covid-19 pandemic, since March and April a very strict lockdown of the Chinese population has been ordered, even complete closures of several major cities such as Shanghai, for example. This situation has had significant consequences for Burberry, particularly in terms of its sales and supply chain, which have been slowed and disrupted respectively.
“Approximately 40% of the company’s operations in the country are currently affected by the containment measures,” continued Brown.
The outlook for Burberry in 2022 is therefore unclear and depends on how quickly China recovers from the lockdown and how quickly Chinese spending recovers.
However, the CFO remains confident for the coming year: “The good news is that when you look at what happened in the first wave, the recovery is very fast and very pronounced,” she stressed, before specifying that, despite everything, Burberry’s sales in China remain 54% above pre-pandemic levels for the whole year.
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