Burberry axes dividend after £245m blow

BURBERRY has taken a £245m hit from coronavirus, dragging profits down for the year, and warned that it could take a while for the luxury industry to recover from the crisis.

The company, known for its trademark check trench coats, also axed its final dividend and said it would keep future payments under review.

Burberry has accessed a £300m emergency loan from the Government to shore up its finances.

The business was forced to shut stores, with 60pc of its branches still closed. Because of this, it had to write off £68m worth of inventory. The rest of the hit relates to shops and the temporary loss of future revenues per site.

The wares it will be unable to shift will be donated, recycled or sold at a discount to its own staff or through clearance sales to customers.

Julie Brown, its finance chief, vowed not to destroy leftover stock, saying it was committed to “non-destruction”.

Burberry landed in hot water in 2018 after it burned unsold clothes, accessories and perfume worth £28.6m to protect its brand.

Pre-tax profits fell to £169m from £441m for the year to the end of March and revenues slipped 3pc to £2.6bn.

Comparable sales over the past three months were down 27pc, laying bare the challenges it faces if stores remain shut for longer.

There were green shoots, however, as mainland China and Korea opened up for business. Sales there are already better than they were this time last year, reflecting some pent-up demand.