LONDON (Reuters) -Burberry said on Thursday its recovery from the COVID-19 pandemic was accelerating, partly due to a rebound in China, allowing the British luxury brand to reinstate a dividend payment.
Other big luxury groups like Hermes, Kering and LVMH are also on course to put the COVID-2019 crisis behind them, with first-quarter revenues already exceeding pre-pandemic levels.
The label, known for its trench coats, check fabric and TB monogram, reported a 10% drop in sales for the year to March 27, hit by store closures and reduced tourism.
The company’s shares fell around 8% in early trading.
But Burberry said fourth-quarter comparable store sales increased 32% year-on-year, despite an average of 16% of stores still being closed.
It said full-price sales rose 63% in the quarter driven by mainland China, Korea and the United States.
In March, Burberry faced calls for a consumer boycott in the Chinese market over Xinjiang cotton.
Taking full-year 2020 as the base year, Burberry expects revenue to grow in the medium term at “a high single digit percentage” compound annual growth rate at full-year 2021 constant exchange rates.
The company said this growth will be driven by full-price sales as the fashion company exits markdowns in mainline stores in full-year 2022.
Burberry also said that the move to reduce markdowns would be a headwind against comparable store sales growth amounting to “a mid-single digit percentage” in the year.
The company said adjusted operating margin progression during the year would be impacted by increased investment to accelerate growth.
Burberry reported an adjusted operating profit of 396 million pounds ($556 million) – ahead of analysts’ average forecast of 378 million pounds, but down 8% from the 433 million pounds made in 2019-20.
The full-year dividend was reinstated at 2019 levels of 42.5 pence.
Shares in Burberry, up 18% so far this year, had closed on Wednesday at 2,104 pence, valuing the business at 8.57 billion pounds.
($1 = 0.7118 pounds)
(Reporting by James Davey; editing by Michael Holden and Jane Merriman)