Burberry to downsize workforce due to 45% drop in sales

Burberry is cutting 500 jobs on top of its existing £140-million cost-cutting program after sales went down 45 percent to $322 million in the first quarter due to the global coronavirus lockdowns.

The British luxury fashion group, which generates most of its earnings from big-spending tourists, including in airports, has been severely impacted by the pandemic that forced shops to close and grounded planes worldwide.

The company plans to eliminate 150 office-based jobs in Britain and 350 roles overseas.

Despite easing lockdowns and air travel resumption, Burberry CEO Marco Gobbetti conceded that it would take time for demand to return to pre-crisis levels.

Burberry also expects its second quarter to be "materially impacted" by the health crisis, with retail sales dipping between 15 and 20 percent.

However, Gobbetti said they were encouraged by the excellent response to their new product in recovering economies and online, with strong demand for leather goods in mainland China and South Korea.

While Gobbetti the overall sales numbers as "predictably ugly," he added that the recovery pace is faster than what the company expected.