Burberry is reportedly set to slash almost 500 roles worldwide to support a £55m cost-cutting effort, amid sliding retail sales.
According to the Guardian, this includes 150 UK head office roles, as the group proposes to “further streamline” its office-based functions and “improve its retail efficiency” in certain geographies outside the UK.
It expects these changes to deliver savings of around £35m in FY 2021, with annualised savings of £55m and an associated one-off restructuring charge of £45m.
It comes after Burberry reported a 48% slump in retail revenue to £257m for the three-month period to 27 June.
In Europe and the Middle East, sales declined by around 75%, impacted by lockdown measures and a significant reduction in travel. However, Burberry said June sales improved but continued to be impacted by a “significant headwind” due to tourist flows
In the Americas sales also slumped 70% impacted by lockdown measures. Despite this, the group said that following the easing of restrictions, trends have “improved significantly” into June.
A statement by the group read: “In Q1, 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. 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.”
It continued: “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.”