Burberry shuts majority of stores in European and American markets amid Covid-19
A majority of Burberry’s stores in its European and American markets have closed as high streets have been hit in the bid to limit the spread of the coronavirus pandemic, the business revealed.
More than 60% of stores in Europe, the Middle East, India and Africa, and 85% of those in the Americas are shut as the battle against the virus continues.
In an earlier-than-expected trading update which was brought forward because of the outbreak, Burberry warned that its in-store sales were likely to take a 30% hit from the virus in the fourth quarter of the year.
Meanwhile, footfall in the stores that are still open is “very weak” while opening hours have been slashed.
Since January 24, sales have deteriorated by around 40% to 50%, Burberry revealed.
“Since our February update, the material negative effect of Covid-19 on luxury demand has intensified and is now impacting the industry in all regions,” said chief executive Marco Gobbetti.
The retailer warned investors that it was expecting to close more stores in coming days.
However, there is some good news out of China, where most of its sites have reopened.
“Our primary concern is the global health emergency and we continue to take every precaution to help prevent the spread of the virus and ensure the safety and wellbeing of our employees, partners and customers,” Mr Gobbetti said.
“Burberry accelerated the release of its trading update to warn on just how bad trading conditions are at this time and how poor the fourth quarter of 2020 is set to be,” said Flavio Cereda and Kathryn Parker, analysts at Jefferies.
They added: “Expect to see very significant markdowns once stores reopen in Europe and the US and even that timing is uncertain.”
Mr Gobbetti said: “We are implementing mitigating actions to contain our costs and protect our financial position, underpinned by our strong balance sheet. We remain confident in our strategy and the strength of our brand and I am exceptionally proud of our teams’ resilience and commitment.”