May 22, 2022

China Covid crisis hits Burberry in pocket

Burberry expected to unveil bumper annual profits, but analysts warn that fresh coronavirus wave in China may have knocked company’s performance

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Burberry is expected to unveil bumper annual profits this week, but analysts warned that a fresh coronavirus wave in China may have knocked the company’s performance. 

In January, the luxury retailer predicted that profits would grow by 35 per cent. 

Profits hit: Shares in the £6.3billion group have fallen by 13 per cent so far this year

However, the rapid spread of Covid-19 in China triggered tighter restrictions and sent Shanghai – a hotspot for luxury spending – into lockdown in March. 

About one third of the FTSE 100 company’s sales are made in China.

Shares in the £6.3billion group have fallen by 13 per cent so far this year. 

Following the latest Covid surge, Barclays analysts cut their forecasts for how much sales would rise in Burberry’s final quarter, which runs from January to March.

They said China would be a core focus of the results and that new boss Jonathan Akeroyd will likely discuss ‘current trading and the continuing risk of disruption due to Covid in China’.

In January, chairman Gerry Murphy said the company was ‘confident of finishing the year strongly’. 

But since then the cost of living crisis has forced many shoppers to rein in their spending.

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