The material negative effect of COVID-19 on luxury demand has intensified and is now impacting the industry in all regions.
@burberry
Burberry warns of plunging sales as number of shops shut. Coronavirus caused retails spaces to shut and demand for luxury goods to dry up.
Given the ongoing escalation of the COVID-19 pandemic, British luxury brand Burberry announced it wants to update the market on the impact on the business . Since 24 January 2020, trading has deteriorated significantly with comparable retail store sales tracking between -40% and -50% over the last six weeks.
The luxury house said in a statement it is implementing mitigating actions to contain costs and protect the financial position, including renegotiating rents, restricting travel and reducing discretionary spending.
“Our primary concern is the global health emergency and we continue to take every precaution to help prevent the spread of the virus and ensure the safety and wellbeing of our employees, partners and customers. We are implementing mitigating actions to contain our costs and protect our financial position, underpinned by our strong balance sheet. We remain confident in our strategy and the strength of our brand and I am exceptionally proud of our teams’ resilience and commitment,” shared Marco Gobbetti, Burberry Chief Executive Officer.
The sales losses in February were predominantly in the Asian markets.
While trading in Mainland China has started to improve with the reopening of most of Burberry stores, sales in EMEIA and the Americas have fallen materially in recent weeks. More than 60% of Burberry stores in EMEIA and around 85% of stores in the Americas are currently closed with those still open operating with reduced hours and with very weak footfall. In total, around 40% of the luxury brand’s directly operated stores globally are closed with additional closures expected over the coming days.
Burberry is implementing home working for the majority of its office-based teams. The brand is reducing work patterns and introducing specific shift rotations for teams whose roles cannot be performed remotely as well as putting in place strict protocols for hygiene and social distancing.
“We remain confident in the strength of our brand and our strategy. Until 24 January 2020, the consumer response to the new product was very positive and as such, we are protecting key growth initiatives in preparation for a recovery in luxury demand,” added Burberry.
“The dire forecast is a rare touchpoint for investors in a time of mounting uncertainty, as a growing number of brands suspend guidance,” wrote businessoffashion.com.
“In its annual earnings on Wednesday, Prada gave little concrete indication of how its business will be affected, beyond warning that the impact would be negative. On the same day, fast-fashion giant Inditex said sales had fallen 24 percent between March 1 and March 16, but declined to provide guidance for the year.”
