Burberry to cut jobs as lockdowns lead to sales fall
Burberry has said it is considering cutting jobs as it revealed that first quarter comparable sales dropped by 45%.
Sales in its EMEIA and US region fell by around 75% and 70% respectively after trade was impacted by Covid-19 lockdowns and a significant reduction in travel. Meanwhile, sales in the Asia Pacific region declined by 10% in the quarter but returned to growth in June.
Marco Gobbetti, Burberry chief executive, 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. 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. Demand for leather goods was particularly strong in mainland China and Korea.”
Looking ahead, Burberry said it expects second quarter trading to continue to be impacted by the Covid-19 pandemic with sales declining by 15% to 20%.
Burberry is now likely to cut 500 jobs as it works to streamline its office-based functions and improve retail efficiency in some markets outside of the UK.
Gobbetti said: “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.”
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