Burberry sees outlook weighed on by China Covid lockdowns

Burberry has reported a jump in annual earnings as sales rebounded, but said its outlook for the year ahead depends on lockdowns and a recovery in spending across China.

The luxury fashion firm reported underlying operating profits of £523 million for the year to April 2, up from £396 million the previous year as like-for-like sales jumped 18%.

On a reported basis, pre-tax profits lifted 4% to £511 million.

But the group said comparable store sales growth slowed to 7% in its fourth quarter as Covid lockdowns in China, its biggest market, hit March trading.

The group said: “Our outlook is dependent on the impact of Covid-19 and rate of recovery in consumer spending in mainland China.

“While the current macro-economic environment creates some near-term uncertainty, we are actively managing the headwind from inflation.”

The group’s results showed that compared with two years ago before the pandemic struck, like-for-like sales were 6% higher thanks to restrictions lifting as economies emerged from the pandemic.

However, China trading has come under pressure in recent months as it has battled to contain a surge in cases of the virus.

Despite this, Burberry still saw comparable store sales jump 50% in mainland China over the full year.

New chief executive Jonathan Akeroyd, who took over at the helm last month after leaving Milan-based Gianni Versace, said: “The company has made great progress over the last five years to elevate the brand, product and customer experience into the luxury space.

“I look forward to setting out my plans for building on these strong foundations and accelerating growth at the interim results in November.”