LONDON – Burberry Group said it will streamline front-office and certain retail functions in a cost-saving reorganization following global lockdowns that caused sales to fall by almost half in the latest three months.
The British fashion house said comparable retail sales fell 45 per cent in the quarter, which was slightly better than analysts expected. Covid-19 prompted luxury boutiques to be closed around the world, and in some markets consumers are only now venturing back onto shopping streets.
The £55 million (S$96.4 million) in new savings comes on top of a previous £140 million target. People familiar with the situation have said the moves will include job cuts.
“We are also proposing to further streamline our office-based functions and improve our retail efficiency in certain geographies outside the UK,” Burberry said in a statement on Wednesday (July 15).
The company behind the iconic trenchcoat announced last week that it would consolidate its offerings around ready-to-wear, accessories and shoes as it aims to elevate the quality of its products while becoming more agile. The reorganization is part of a plan put in place by chief executive officer Marco Gobbetti, whose urgency has grown with the onset of the coronavirus pandemic.
The pandemic has hit Burberry’s turnaround plans after the company hired star designer Riccardo Tisci, formerly of French fashion house Givenchy, in 2018. With Tisci, Burberry has been trying to woo millennials and younger shoppers, adding to its accessories line and trying to move its image upmarket.
Burberry, along with the broader luxury industry, faces a challenge: the majority of the industry’s sales rely on physical stores. The lessons from the lockdowns are set to accelerate a digital shift to get more customers to spend that way.
The company didn’t provide a full-year guidance but expects the current quarter ending September will “continue to be materially impacted by the pandemic.”
The stock has lost 29 per cent of its value this year.