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Burberry brings back dividend but Covid restrictions slow its recovery

Burberry brings back dividend but Covid restrictions keep its recovery in check

Burberry brought back its dividend as sales returned to pre-pandemic levels despite Covid restrictions hitting demand in parts of the world.

The British luxury fashion house will return £47.3million to shareholders through an 11.6p per share dividend and will buy back £150million of shares.

The company is also rolling out a new kind of store aimed at bringing in big-spending customers. It has opened 15 of the stores – with one on London’s Sloane Street – and will have 50 of them worldwide by the end of March.

Payouts: Burberry will return £47.3m to shareholders through an 11.6p per share dividend – above pre-pandemic levels – and will buy back £150m of shares

The London store features a gallery-like ground floor acting as a backdrop for its clothing collections.

As well as targeting the higher-spending customers with its new store design it is moving away from discount sales.

The expansion plans came as Burberry reported a 38 per cent rise in half-year revenues to £1.2billion with profits of £196million.

That was in the same region as the £1.3billion of revenues and £203million of profits it made in the six months before the pandemic. 

Chairman Gerry Murphy hailed ‘strong progress’ in the six months to September 25, with sales accelerating in countries with fewer Covid restrictions. 

Burberry said growth over the six months in America, China and South Korea was up significantly.

China saw sales for the half year 30 per cent above their pre-pandemic levels – despite a knock from travel restrictions in August. In North and South America sales were up 38 per cent and in South Korea they were up 40 per cent.

But elsewhere it was hit hard by low tourist levels amid a resurgence of Covid including in Japan, which is still under heavy travel restrictions.

In Europe, the Middle East, India and Africa sales were 31 per cent below pre-pandemic levels. Tourists usually account for half of sales in these areas. Shares fell 5.4 per cent, or 105.5p, to 1861.5p.

AJ Bell investment director Russ Mould said its recovery from the pandemic had been ‘uneven’ because of difficulties in China and travel. 

It is heavily reliant on Asian tourists buying items while travelling at airport stores or in fashion hotspots.

Mould said: ‘With travel still restricted and some people reluctant to jet off in the same way they used to, this part of Burberry’s business is really struggling.’

Murphy thanked outgoing boss Marco Gobbetti for leading the company’s transformation.

He said replacement Jonathan Akeroyd, 54, who was poached from Versace and will take over in April, would ‘accelerate growth’.

Akeroyd – who ran Alexander McQueen for 12 years before taking over at Versace in 2016 – could scoop £11million in his first year in charge.