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Burberry reinstates progressive dividend policy as sales gradually recover

Last updated: 08:30 13 May 2021 BST, First published: 07:42 13 May 2021 BST

Burberry Group PLC - Burberry reinstates progressive dividend policy as sales gradually recover

Burberry Group PLC (LON:BRBY) has reinstated a progressive dividend policy after posting an improvement in sales despite some of its markets still remaining under some level of restrictions.

In the current financial year, the FTSE 100 group expects revenue to grow 8-9% underpinned by the continued outperformance of full-price sales.

READ: Burberry catches the backlash as China retaliates against Uigher sanctions

Adjusted operating margin progression will be hit by operating expense normalisation and increased investment to accelerate growth, with more meaningful margin accretion thereafter.

In the quarter to 27 March, store sales climbed 32% compared with last year and were down only 5% compared to the same period in 2019 despite an average 16% of stores being closed.

Quarterly full-price sales grew 63% and 12% compared to 2020 and 2019 respectively, driven by Mainland China, Korea and the US.

In the year ending 27 March, revenue shed 10% to £2.3bn, impacted by store closures and reduced tourism, though it recovered in the second half by rising 8%, following a 30% tumble in the first six months.

Full-year full-price sales rose 7% thanks to an “excellent” response to products, increasing brand strength attracting new and younger customers and local customer traction, thanks to innovative selling formats during lockdowns.

The luxury fashion designer opened a ‘social retail’ store in Shenzhen Bay where customers can interact with items through a dedicated WeChat mini programme.

Adjusted profit before tax slid 12% to £366mln while cash net of overdrafts and borrowing was £919mln at period-end.

A £300mln revolving credit facility is currently undrawn, and the UK Government sponsored COVID Corporate Financing Facility was repaid in February 2021.

The board declared a full-year dividend of 42.5p, the same as in 2019 and above last year's 11.3p per share.

"Burberry has been a rare retail success story during the pandemic. With most fashion brands hit hard by physical store closures, the company has managed to pare back some of its losses thanks to its East Asian division," said Freetrade analyst David Kimberley.

"Tourism is obviously a big factor here too though. It wouldn’t be surprising if many of those China sales would’ve originated in Europe had we been able to travel and, as long as restrictions remain in place, it’s hard to see Burberry’s Paris or London stores doing as much business as they have in the past."

Shares slipped 7% to 1,946.5p on Thursday morning.

--Adds analyst comment, shares--

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