Burberry will close its under performing Thomas Burberry business and axe up to 290 UK jobs at its Yorkshire factory, after the luxury brand reported a 3% fall in like-for-like sales at its stores.
The closure of the Thomas Burberry business, Burberry’s lower priced bridge brand, is part of a £50m cost saving initiative and could lead to a further 250 redundancies in Spain.
In the UK, Burberry’s sewing factory in Rotherham, Yorkshire, will be closed and supporting operations scaled back, which it said could result in up to 290 job losses. Burberry’s Castleford manufacturing facility, also in Yorkshire, will stay open.
Group underlying sales rose 9% to £329 million for the third quarter ended December 31.
Group performance was boosted by Europe and Asia, which saw double-digit growth at retail. The UK, Italy, Korea and Hong Kong were strong performers. However the US and Spain delivered “weak” performances.
Wholesale sales were also strong. Burberry’s underlying wholesale revenue grew by 8% to £95m over the period. However the luxury brand said it expected its wholesale arm to be down by a high single digit percentage on an underlying basis for the second half as a whole, with demand for in-season re-orders from its stockists lower than expected.
Licensing sales fell 8% to £21m, with continued weakness in Japan.
Butberry chief executive Angela Ahrendts said: “Revenue at Burberry increased by 9% at constant currency in what remained challenging and volatile markets. There was an improved retail performance in December, albeit with continuing pressure on gross margin.”
She added: “As we continue to evolve our business model, we have today announced further cost efficiencies. These are enabled in part by the investments we have previously made in supply chain, IT and infrastructure. These savings, coupled with our proven strategies, strong brand perception and conservative balance sheet position us to trade through the current difficult environment and emerge even stronger when the global economy recovers.”