Home Business News Burberry hit by tourist shortfall

Burberry hit by tourist shortfall

by LLB Reporter
11th Nov 21 9:41 am

There have been two pressure points for luxury goods firm Burberry during the pandemic – China and travel – and this helps explain why its recovery has been so uneven.

Historically Burberry has been heavily reliant, particularly in terms of European sales, on Asian tourists buying items as part of their trip, whether that be in airport concessions or stores in popular destinations.

“With travel still restricted and some people reluctant to jet off on holiday in the same way they used to, this part of Burberry’s business is really struggling,” said AJ Bell’s Russ Mould.

“This explains why sales are down on pre-pandemic levels in the Europe, Middle East, India and Africa region.

“Burberry’s weak performance here is detracting from an otherwise robust contribution from Asia Pacific and the Americas in particular – even if growth on the same period two years ago slowed in the second quarter for the group as a whole.

“Burberry was a canary in the coalmine for the wider market at the start of the pandemic given its significant exposure to China and, while the situation isn’t as bad as in 2020, the company’s business in the country has been affected by the recent resurgence in Covid-19 and weakening economic growth.

“Shareholders will hope these are short-term issues and there were more encouraging signs around the medium-term prospects for Burberry as digital sales’ contribution to the mix continues to build.

“Departing CEO Marco Gobbetti is handing over the business in better shape than he found it as he prepares to give way to his successor, Versace alumni Jonathan Akeroyd, next spring.“

 

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