- Full price sales increased in the final quarter
- The dividend has been reinstated at the 2019 level
Burberry’s (BRBY) trading improved through the second half of its 2021 financial year, but revenues still came up short on the prior year as an average of 16 per cent of its stores were closed during the lockdown disruptions.
More significant, however, was the increase in full-price sales through the final quarter, driven by increased demand in China, South Korea and the US – a promising sign.
Adjusted operating profit of £396m was down 9 per cent at constant currencies, though there was a 50-basis point increase in the underlying margin – another pointer to operating efficiencies through the quarter.
However, margins will come under pressure in FY22 due to “operating expense normalisation and increased investment to accelerate growth”. That warning was not lost on the market, as the shares were marked down almost 9 per cent on results day.
The group said the full-year dividend would be reinstated at the 2019 level of 42.5p per share (ex-div date: 1 July) on the back of strengthening cash generation. Free cash flow came in at £349m, versus £66m in 2020. Hold at 1,924p.
Last IC View: Hold, 1,658p, 12 Nov 2020
