Luxury brands to ax shops and staff

Business | 16 Jul 2020

Winnie Lee

Top internationl brands are planning to ax shops and staff to cut costs amid a pandemic that is underlining their bottomlines in red.

That came despite dashion house Burberry saying mainland sales growth in June surpassed the 30-percent growth rate in January when the outbreak hadn't escalated yet.

Although sales recovered last month, it plans to lay off 500 jobs globally, including 150 in its UK head offices, to slash costs by 55 million (HK$538.2 million), after lockdowns caused sales to plunge by 48.4 percent to 260 million for the first quarter, as of June 27.

However, the drop in June narrowed to 20 percent.

Based on June data, it expects same-store sales to fall 15 to 20 percent year on year in this quarter.

Regionally, same-store sales dipped 10 percent in the past quarter. First-quarter mainland sales saw double-digit growth.

The parent company of Calvin Klein and Tommy Hilfiger is also closing 162 Heritage Brands shops in north America and lay off 12 percent of the staff, or around 450 positions. It put costs savings at US$80 million (HK$624 million) a year.

In the mainland, Anta Sports Products (2020) warned its net profit for the first half could drop up to 35 percent from a year ago, while China Lilang (1234) expects to see a 30-35 percent year-on-year drop in net profit.

Anta said gross profit margins for its Anta and Fila brands also fell.

China Lilang's fall was mainly due to sales revenue dropping.

Total revenue generated by products of Lilanz declined 30 to 35 percent.

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