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Burberry Q1 Comparable Sales Down 45%; Announces Organisational Change

Retailer Burberry Group plc (BRBY.L) reported that its comparable sales declined 45% in the first-quarter. It is proposing to further streamline its office-based functions and improve its retail efficiency in certain geographies outside the UK.

Quarterly sales were severely impacted by the drop in luxury demand from COVID-19. The company expects that it will take time to return to pre-crisis levels with the resumption of overseas travel.

The company said that its first-quarter comparable sales declined 45%. comparable retail sales were down 20% in June 2020. While growth in Mainland China and Korea in June was ahead of pre COVID-19 levels, albeit with some benefit from the repatriation of sales given COVID-19 travel restrictions.

The company said it is making some organisational changes. It is evolving its approach to product, creating three new business units covering Ready-to-Wear, Accessories and Shoes. The company is also proposing to further streamline its office-based functions and improve its retail efficiency in certain geographies outside the UK.

The company expect the organisational changes, which include office space rationalisation, to deliver savings of around 35 million pounds in fiscal year 2021, with annualised savings of 55 million pounds and an associated one-off restructuring charge of 45 million pounds. The savings are incremental to its previously announced 140 million pounds cumulative cost saving programme.

The company said it will be able to reinvest the savings into consumer-facing activities. These include pop up stores, visual merchandising, digital activations, events as well as marketing.

The retailer expects its second quarter to continue to be materially impacted by the pandemic. In retail, tourist flows are likely to remain negligible, and store operations are continuing to face significant headwinds, with some remaining closed and operating with reduced trading hours.

The company projects that comp retail sales for the second-quarter of 2021 will decline by 15% to 20%. In wholesale, the company is collaborating with its partners to protect the brand and as a result anticipate the first-half of 2021 sales declining around 40% to 50%.

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