February 24, 2024


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Burberry proposes 500 job cuts as fashion firm posts sales drop

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Burberry proposes 500 job cuts as fashion firm posts sales drop

Burberry is planning to cut around 150 jobs at its London and Leeds offices, it emerged on Wednesday as the fashion company posted a fall in first-quarter sales.

There are also some 350 non-UK roles in shops that could be affected by a restructure, Burberry’s finance chief Julie Brown said.

The plans were outlined as the luxury retailer reported a 45% fall in first quarter sales and showed how Covid-19 has hit the business.

The company was hurt by the Covid-19 lockdown when various countries ordered retailers to shut shops and travel restrictions came in. In England non-essential stores were only allowed to reopen from June 15.

In total Burberry employs 10,000 people, including 3500 in Britain. There are 1350 based in the London HQ.

In the UK Burberry said it wants to “streamline office-based functions”, but Brown said Horseferry House in Victoria will continue to be its HQ. Most employees have been working from home since lockdown started in March.

The firm expects the move to help it make costs savings of around £35 million in the year to March 2021, with annualised savings of £55 million. There will be a one-off restructuring charge of £45 million.

Burberry added: “Conditional on the macroeconomic recovery from Covid-19 and luxury industry growth, we will be able to reinvest these savings into consumer-facing activities. These include pop up stores, visual merchandising, digital activations, events as well as marketing.”

The FTSE 100 group’s chief executive Marco Gobbetti, said: “In Q1, 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.”

Some 360 out of the retailer’s 417 global shops have reopened, with around half operating on reduced hours. Burberry expects its second quarter (to end September) to continue to be “materially impacted” by the pandemic.

It said in retail, “tourist flows are likely to remain negligible, and store operations are continuing to face significant headwinds”.

Gobbetti pointed to some encouraging signs, and added: “ We are encouraged by the improving trends in all regions and the promising exit rate for June. We saw an excellent response to new product launches in recovering economies as well as online.”

The boss said demand for leather goods was particularly strong in Mainland China and Korea, bringing new, younger luxury customers to the brand.

Growth in Mainland China and Korea in June was ahead of pre Covid-19 levels.

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