// Burberry announces 500 job cuts amid the second phase of its previously-announced turnaround strategy
// It also plans to make job cuts outside Britain after lockdowns led to plunging sales
// Burberry did not provide an exact number of how many jobs will be impacted
Burberry has revealed plans to make 500 job cuts through efforts to streamline UK office operations as well as changes across stores outside Britain after lockdown sent sales tumbling.
The luxury fashion retailer said around 150 office jobs are expected to go in the UK, where it is headquartered, and a further 350 overseas as it looks to slash annual costs by a further £55 million.
This comes on top of the previously announced £140 million cost savings, such as the decision to cancel dividends at the end of the last financial year and renegotiating rents, restricting recruitment, travel and other discretionary spend.
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The cuts will affect around five per cent of its overall 10,000 employees worldwide, including four per cent of its 3500 staff in the UK. Consultation with affected staff has commenced.
Burberry said it would also look to axe some office space as home working has proved successful amid lockdowns worldwide.
The group did not say how many offices would go or where, but confirmed it would keep its Horseferry Road head office in London and its Leeds site.
It also stressed UK retail and manufacturing jobs would not be affected by the latest cost-cutting plans.
The fashion house revealed comparable retail sales plunged 45 per cent in the three months to June 27 due to coronavirus lockdowns in all its markets leading to the temporary closure of stores.
Global travel restrictions also impacted its sales, since many of its in-store customers are affluent shoppers visiting Burberry’s flagship destinations in high-end areas.
Meanwhile, Burberry said revenues were 49 per cent lower for the first quarter.
The retailer started the quarter with around 60 per cent of stores closed, which reduced to 15 per cent in June.
“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,” Burberry chief executive Marco Gobbetti said.
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.”
Burberry 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 per cent.
This comes after comparable sales declines narrowed to 20 per cent 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.
Burberry added that trading in the second half would “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.
with PA Wires