Burberry has been forced to close more than half of its stores as the fashion industry continues to struggle amid the coronavirus pandemic.
The British fashion giant said it has closed 60 per cent of its outlets in Europe, the Middle East, India and Africa as governments across the world tighten restrictions in a bid to halt the spread of Covid-19.
The heritage brand warned that sales would plummet as a result of the measures, estimating that it could lose up to 30 per cent of its revenue in the fourth quarter as people are urged to stay home and self-isolate.
Burberry – which has its headquarters in London – said that 85 per cent of its US stores had already shut and expects further closures. However, business has improved in China which today announced no new cases of Covid-19 for the first time since the outbreak began.
In-an-earlier than expected trading update, chief executive Marco Gobbetti said in a statement: “Since our February update, the material negative effect of Covid-19 on luxury demand has intensified and is now impacting the industry in all regions.
“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.”
Mr Gobbetti added: “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.”
Meanwhile, retail chain Next warned that it is preparing for a “significant” trading downturn amid the coronavirus pandemic as it revealed full-price sales have tumbled by 30 per cent in recent days.
The group said stress tests showed the business could “comfortably sustain” more than £1 billion loss of sales over the full year – including sales declines of up to 100 per cent in some weeks during the peak of the outbreak.
Online sales are likely to fare better than its 498 stores due to social distancing measures, but it gave a bleak outlook for trading in the coming months, cautioning that “people do not buy a new outfit to stay at home”.
Earlier this week chancellor Rishi Sunak announced an emergency funding package of over £350 billion to help struggling businesses battle through the coronavirus crisis.
The measure added to the £7 billion of support for business outlined in last week’s budget which included a one-year break from business rates as well as government grants of up to £25,000 for struggling retailers and pubs.
However, the government has faced increasing pressure to support the poorest members of society amid allegations that the emergency plans did “nothing” to protect the most vulnerable.
On Thursday morning, former Labour prime minister and chancellor Gordon Brown called on the government to do more to protect people’s jobs as the pandemic takes hold in the UK.
He said that the chancellor must do more to protect those in unstable employment and avoid redundancies.
Mr Brown, who served ten years as chancellor under Tony Blair, said the “next few weeks” would be critical and called for extra measures to ensure that those were feeling unwell didn’t put themselves at risk.
Luxury fashion stores pull down shutters amid coronavirus pandemic