We wrote about Louis Vuitton seeing a 15% decline in sales on account of the global pandemic requiring the shuttering of all its stores, and today we are reporting that Burberry has seen a soul crushing 27% drop on sales for the same reason.
Burberry's reaction? after borrowing £300 million via the U.K. business support plan, and still tanking, it has decided to cancel its full-year dividend payment to shareholders, a move which it expects will save £120 million.
As usual, corporate double speak is trying to upset this move motivated purely by greed, and Chief Executive Marco Gobbetti said in a statement. referring to the horrendous drop in sales "we have found new ways to strengthen our connection with consumers drawing on our digital leadership . . . . . It will take time to heal but we are encouraged by our strong rebound in some parts of Asia. and are well-prepared to navigate through this period."
It's unsurprising that Burberry is doing so appallingly, the brand is not making particularly good decisions recently. it drew a considerable amount of negative press when it was found that it was attempting to take its brand image up a peg or two, emulating Hermes practice of destroying unsold clothes at the end of each season. rather than its standard practice of sending them to bargain basement outlets crammed in tighter than clothes on racks at Primark.
While were on the subject of Hermes, our story which mentioned Louis Vuittons 15% drop was about Hermes seeing only a 7.7% drop, and this causing it's share price to increase by 2.6%. It appears that once again the point we made in that post, that quality is timeless, and flashy one-trick-pony try-hard brands like Burberry are rightfully suffering the effects of the crisis.
We hope this signals a change in attitude towards luxury goods, that luxury and quality will again begin to mean something. It's pretty unlikely however.