Burberry has scrapped previous guidance for its full-year results as it warns that coronavirus has had a ‘material negative effect’ on sales in China.
The luxury fashion retailer has closed 24 of its 64-strong store estate in mainland China, representing over a third of its stores in the region, as a result of the coronavirus outbreak.
Stores that are still open are operating with reduced hours and are “seeing significant footfall declines”. Burberry’s chief financial officer Julie Brown told Bloomberg that sales in these stores have declined between 70% and 80% over the last two weeks.
Burberry also warned that it expected the spending patterns of Chinese customers in international tourist destinations to “worsen over the coming weeks” due to widening travel restrictions.
As a result of this unprecedented decline in sales in the region, and the lack of clarity on how long the situation will continue, Burberry has said it can no longer rely on previous forecasts as an accurate indicator of its full-year results.
The retailer’s current financial year ends next month, and China accounts for approximately 40% of its overall sales.
Chief executive officer Marco Gobbetti said: “The outbreak of the coronavirus in mainland China is having a material negative effect on luxury demand. While we cannot currently predict how long this situation will last, we remain confident in our strategy.
“In the meantime, we are taking mitigating actions and every precaution to help ensure the safety and wellbeing of our employees.”
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