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Burberry releases interim results, operating profits fall 75%

The COVID-19 pandemic significantly hurt sales at Burberry but a recovery is already underway. Yahoo Finance's Brian Sozzi breaks down the Luxury company's latest results and what it signals for the retail sector.

Video Transcript

MYLES UDLAND: Right, a name we don't often talk about here on the shows, Brian Sozzi, you are looking at Burberry, going across the pond for a check of the luxury market. An interesting quarter for the company, because all we talk about, or all I like to think about, is the K-shaped recovery, and I think Burberry's results showing some of that.

BRIAN SOZZI: Got to keep that global market perspective, Myles. But yes, it's interesting. I've mixed emotions on this quarter for Burberry. The stock is reacting favorably to what they had to say. Now, the quarter in four looking commentary was good. Same store sales down 6% in the most recent quarter. This company was seeing close to 50% declines coming into this quarter.

The rebound for them really came in the Americas. Same store sales up 21%. They fell 70% in the previous quarter to stunning declines. What I think got investors excited here, they noted that sales grew in October. That's all fine and good. And under normal circumstances, the stock would probably rip higher for the next five days, and every Wall Street analyst would raise their price targets on the stock of the next two weeks. But you almost have to think, Myles, that guidance is completely irrelevant in a world that is now shutting down, most importantly, the European luxury market. A lot of these stores for Burberry, Hugo Boss, you name it, they're going to shut down. When they reopen? Who knows.

MYLES UDLAND: And I guess, Sozzi, I would ask, how levered do you consider Burberry to the malls? I mean, how many people are seeking out Burberry, or do you have to go to Harrods to then feel like you're going to buy a Burberry coat?

BRIAN SOZZI: You have to go to Burberry stores. Burberry is among a lot of high end retailers that have now just started opening stores outside of the mall, but to your point, obviously, you can go to some better Macy's stores and buy Burberry gear.