Burberry signals job cuts as sales plunge after lockdowns worldwide
Luxury fashion firm Burberry has signalled job losses at the group as it revealed plans to streamline office operations in the UK and make cuts across stores outside Britain after lockdown sent sales tumbling.
The firm did not provide numbers of jobs likely to be impacted, but said it would also look to axe some office space in a move to save an extra £55 million in annual savings.
This comes on top of the previously announced £140 million cost savings.
Burberry employs more than 1,000 staff.
The group revealed comparable retail sales plunged 45% in the three months to June 27 due to coronavirus lockdown closing stores and amid travel restrictions worldwide.
Retail revenues were 49% lower.
It started the quarter with around 60% of stores closed, which reduced to 50% in June.
Marco Gobbetti, chief executive of Burberry, said: “Sales were severely impacted by the drop in luxury demand from Covid-19 and we expect it will take time to return to pre-crisis levels with the resumption of overseas travel.”
He added: “As we enter the second phase of our strategy, we are sharpening our focus on product and making other organisational changes to increase our agility and generate structural savings that we will be able to reinvest into consumer-facing activities to further strengthen our luxury positioning.”
The group also warned it expects its second quarter to the end of September to be “materially impacted” by the pandemic, with sales forecast to drop by up to 20%.
This comes after comparable sales declines narrowed to 20% last month.
“In retail, tourist flows are likely to remain negligible, and store operations are continuing to face significant headwinds, with some remaining closed and operating with reduced trading hours,” it said.
It said trading in the second half will “largely depend on the actions governments pursue to control the spread of the virus as economies restart”, including the potential for a second peak of the pandemic and additional lockdowns.