1st Apr 2022 09:13
(Alliance News) - Burberry Group PLC's fourth quarter outturn will suffer from Covid-19 disruption in luxury goods retailer's key China market, analysts at Barclays predicted on Friday.
Lockdowns have been imposed in China in recent weeks, notably in Shanghai, a city of about 25 million.
China is a key market for the luxury goods sector. Shares in Burberry have fallen 14% since the start of March, amid market worries stemming from China's recent Covid-19 outbreak, as well as the war between Russia and Ukraine.
On Friday morning in London, Burberry shares were up 0.1% at 1,675.50 pence each.
Burberry reports annual results on May 18. It will be the first set of annual results posted by trench coat maker with Chief Executive Jonathan Akeroyd at the helm. Akeroyd was named as CEO in October and took on the post March 15, replacing Marco Gobbetti.
"During Burberry's FY22 results, investor focus will likely be on the new CEO's first comments on the impact of Covid in China and more broadly on the sustainability of demand in a weaker macro environment," analysts at Barclays said.
"His arrival is likely to bring more clarity which is a positive, however, the market may focus on Q1 current trading and on the continuing risk of disruption due to Covid in China."
Barclays lowered its fourth quarter comparative sales forecast to a 6% hike, from the previous prediction of 10% growth. The investment bank said the downgrade stems from Covid-19 lockdowns in Shanghai and Shenzhen.
China accounts for over a third of Burberry sales.
Barclays noted the company's fourth-quarter sales will benefit from an extra week of trading. Financial 2022 spanned 53 weeks, while the prior year consisted of just 52.
Barclays expects Burberry to post fourth-quarter sales growth of 15% year-on-year on a constant currency basis.
By Eric Cunha; [email protected]
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