(Bloomberg) -- Burberry Group Plc warned of a severe downturn this fiscal quarter, saying that store closures due to the Covid-19 pandemic will probably reach their peak.

• Retail sales fell 3% on a comparable basis in the 12 months ending March 28. Analysts had expected a decline of 4.6%.

Key Insights

• The pandemic has snarled Burberry’s attempts to revive sales with star designer Riccardo Tisci, formerly of French fashion house Givenchy. Half of the company’s stores are closed and Burberry said that level will remain near its peak throughout the first quarter, which runs through June.
• Burberry provided some hopeful signs for a rebound in Asia. Since April, sales have returned to growth in mainland China and South Korea as consumers catch up on purchases thwarted by lockdowns.
• To bolster cash holdings, Burberry withheld any final dividend and said that future payments will be decided at the end of this fiscal year. Burberry has 887 million pounds ($1.1 billion) in cash and has been accelerating a cost-cutting program.
• Burberry said it’s too early to offer a specific forecast. After two years of broadly flat business, the turnaround plan under Chief Executive Officer Marco Gobbetti had targeted a return to growth and “meaningful” margin expansion starting this year.

Market Reaction

• The stock has lost more than a third of its value this year.

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