Clothing brand Burberry would cut about 500 jobs globally, including 150 British-based office roles, as it forecast no quick recovery in demand, particularly from high-spending tourists.
The company announced the layoffs alongside a 45% drop in first-quarter like-for-like sales, reflecting store closures following lockdowns in Europe and the United States and a dearth of long-haul travelers.
Burberry’s Q1 sales were severely impacted by the drop in luxury demand from COVID-19 and the company is expecting it will take time to return to pre-crisis levels with the resumption of overseas travel.
Marco Gobbetti, Chief Executive Officer, said, “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, bringing new, younger luxury customers to the brand.”
He added, “As we enter the second phase of our strategy, we are sharpening our focus on product and making other organizational 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.”
According to the Chief Financial Officer, Julie Brown, the job losses would not affect staff in its British stores or its manufacturing sites in Yorkshire, where the of its famous trench coats had restarted.
The job cuts, which affect about 5% of its global total, would result in annualized savings of 55 million pounds at a one-off cost of 45 million pounds.