Burberry to cut 500 jobs worldwide in £55m cost-saving drive
Plan, which includes 150 UK head office posts, comes as sales slump in Covid-19 crisis
Wed 15 Jul 2020 09.07 BSTLast modified on Wed 15 Jul 2020 11.18 BST
Burberry employs 3,500 people in the UK.
Burberry is to cut 500 jobs worldwide, including 150 in its UK head offices, to slash costs by £55m after a slump in sales during the coronavirus pandemic.
Retail sales dived by 48% in the three months to the end of June, including a 75% fall in Europe and the Middle East, as countries closed shops and offices and severely limited travel to control the spread of Covid-19. Sales in the UK were particularly hard hit, with tourists staying away and stores remaining closed for longer than in Europe and Asia.
In the UK, where Burberry employs 3,500 people, the company said it would keep its headquarters in both Leeds and central London but would be cutting head office roles across numerous departments. It said jobs in stores and manufacturing were safe.
Outside the UK, no stores will close but the company said it wanted to “improve retail efficiency” with fewer staff in stores and cut back office space, with a shift to working from home in some areas.
Julie Brown, the chief operating officer of Burberry, said the company was also keeping its portfolio of 13 stores in Hong Kong “under review” after sales were hit by pro-democracy protests, followed by coronavirus. The territory now accounts for less than 3% of Burberry’s sales, down from 8%.
Burberry said it wanted to reinvest the savings in marketing activities including pop-up stores, digital campaigns, events and improved store displays.
The £55m savings drive comes on top of £140m of cost cuts already announced.
Brown said the company would be closing some offices outside the UK as it realised that staff could work just as well from home. She said: “One of the good things that has come out of covid is ways of working differently.”
The luxury British brand, best known for its trenchcoats and signature check, had previously cancelled its end-of-year payment to shareholders, worth about £120m last year, and has borrowed £300m via the UK government-backed business support scheme.
The 500 jobs being axed represent about 5% of the group’s global workforce. The restructuring, which will pool expertise within three new business units covering ready-to-wear, accessories and shoes, will lead to one-off costs of £45m.
Marco Gobbetti, the chief executive, said: “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.”
The company said tourist travel, which generates strong sales for luxury goods companies, was “likely to remain negligible” for the time being while some stores remained closed or operating with reduced hours under coronavirus lockdown restrictions around the world.
Burberry said sales in established stores slid by 20% in June and it expected trading in the three months to the end of September to show a similar decline of 15% to 20%.
Gobbetti said: “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.”