The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
LONDON, United Kingdom — A Burberry Group Plc reorganisation will include job cuts in the British fashion brand's head office that follow a lockdown-induced plunge in sales, according to people familiar with the situation.
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 reorganisation is part of a plan put in place by Chief Executive Marco Gobbetti, whose urgency has grown with the onset of the coronavirus pandemic.
The revamp will lead to an unspecified number of job cuts in the London head office, according to people familiar with the situation. Burberry employs just over 10,000 people and did not furlough any of its UK staff during the pandemic.
Burberry declined to comment on any potential job eliminations. The reorganisation is about ensuring “we have the right structures in place for the next phase of our strategy,” a representative said in an emailed statement, adding that it is “designed to enhance our product focus and enable us to be more agile and more specialised, ultimately bringing us closer to our customer and driving luxury standards.”
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The news comes as Burberry is set to report first-quarter sales on Wednesday, with analysts estimating a decline of 49 percent.
Gobbetti has sought to turn around Burberry with a strategy that includes an expansion of its handbag offerings, a lucrative business for peers like LVMH’s Louis Vuitton and Hermes International that’s typically been more resilient than apparel during crises.
The turnaround strategy has rested largely on the shoulders of star designer Riccardo Tisci, formerly of French fashion house Givenchy, who joined Burberry in 2018. But the pandemic has hit these efforts, with most of the stores closed since the start of the year.
By Angelina Rascouet and Deirdre Hipwell
Hermes saw Chinese buyers snap up its luxury products as the Kelly bag maker showed its resilience amid a broader slowdown in demand for the sector.
The group’s flagship Prada brand grew more slowly but remained resilient in the face of a sector-wide slowdown, with retail sales up 7 percent.
The guidance was issued as the French group released first-quarter sales that confirmed forecasts for a slowdown. Weak demand in China and poor performance at flagship Gucci are weighing on the group.
Consumers face less, not more, choice if handbag brands can't scale up to compete with LVMH, argues Andrea Felsted.