Burberry to axe 500 jobs as sales plunge
Burberry will cut 500 jobs as part of a major cost-cutting programme prompted by a sales slump amid the coronavirus crisis.
The luxury fashion giant said about 150 office-based roles in the UK will be affected, but no retail or manufacturing staff in Britain will be included in the planned overhaul.
The jobs set to be axed represent about 5pc of Burberry's global workforce, with roles in its overseas offices and retail outlets also in danger.
Chief financial officer Julie Brown said the company planned to close some overseas offices following the shift to homeworking.
“One of the good things that has come out of Covid is ways of working differently," she said.
Burberry employs about 3,500 staff in the UK, none of which have been placed on furlough under the Government's job retention scheme.
The company reported a 45pc slump in sales to £257m for the three months to June as the closure of its stores and restrictions on international travel hampered demand for its luxury goods. Europe was hit hardest during the period with sales down 75pc, while revenues in the US fell 70pc.
Burberry said following a 10pc sales fall in the Asia-Pacific region trading has returned to growth, with mainland China sales in June growing ahead of their 30pc pre-Covid levels. This boost this was partly due to a shift toward domestic spending as travel restrictions continued to dampen outbound tourism.
Marco Gobbetti, chief executive, said first quarter sales were severely affected by the drop in luxury demand due to Covid. "We expect it will take time to return to pre-crisis levels with the resumption of overseas travel."
Burberry said it will save about £55m from the reduction in staffing on top of its previously announced £140m cost-saving programme. It plans to reinvest the savings in marketing activities, pop up stores, visual merchandising and events as it tries to lure new, younger customers to the brand.
The restructuring will incur a one-off charge of £45m.
Burberry warned that trading in the three months to the end of September was likely to be down by 15 to 20pc after sales fell by a fifth in June.
"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.
Shares fell 5.1pc to to £14.78.
