18th May 2022 14:38
(Alliance News) - Burberry Group PLC's stock struggled to find direction on Wednesday, as strong top and bottom line growth, as well as a buyback announcement, were offset by ongoing Covid-19 worries in China.
Burberry shares were 0.1% lower at 1,582.50 pence each in London on Wednesday afternoon.
Burberry's revenue and adjusted operating profit topped consensus.
Adjusted operating profit in the financial year ended April 2 jumped 32% to GBP523 million from GBP396 million, matching company-compiled consensus, which forecast a profit as high as GBP522 million.
Revenue grew 21% to GBP2.83 billion from GBP2.34 billion, which topped company-compiled consensus of GBP2.82 billion.
The luxury retailer's results, however, were marred by a caution in its outlook.
The company noted that virus lockdowns in China, as well as reduced tourism in Europe, the Middle East & Africa as a result of Covid-19-related curbs presented headwinds throughout the year.
"The Covid-19 pandemic continued to have an impact on the global economy throughout the current year. While the adverse impact on the group's operations and financial position has significantly diminished during the course of the financial year, at the date of signing these financial statements, there remains significant uncertainty regarding the timing of any global recovery from Covid-19, and the return to previous levels of footfall in city centres, travel and tourism in some locations," Burberry said.
It was the first set of results delivered by new Chief Executive Jonathan Akeroyd. Akeroyd was named as CEO in October and took on the post March 15, replacing Marco Gobbetti.
"Burberry's first set of results under new CEO Jonathan Akeroyd painted a promising picture of the luxury retailer. The group managed both top and bottom line beats despite ongoing Covid restrictions that have kept tourist spend at bay. Brand strength was a real highlight with full price sales on the up, particularly given that's been a key pillar of the group's transformation strategy," Hargreaves Lansdown analyst Laura Hoy commented.
"But the market was reluctant to cheer Burberry's results, instead focusing on the note of caution in management's guidance. While medium term targets remain, the group noted that the current backdrop could create some uncertainty ahead. This reflects uncertainty regarding Covid regulations, which suppressed tourist spending over the past year."
Burberry restored its "normal pay-out ratio" and declared an annual dividend of 47.0 pence, up 11% from 42.5p the prior year. In addition, it plans a GBP400 million share buyback due for completion in the current financial year.
By Eric Cunha; [email protected]
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