Burberry has cautioned shareholders of a ‘material negative effect’ on discretionary consumer spending arising from the spread of the coronavirus.
The luxury fashion house has become increasingly dependent on high-spending Chinese consumers but with much of the country in lockdown due to the pandemic, that market is seizing up, with 24 out of 64 of Burberry’s mainland Chinese stores now shuttered and the remainder operating on reduced hours amid severe declines in footfall.
Moreover, Burberry expects trading conditions in Europe to follow suit over the coming weeks as the impact of travel restrictions feed its way into slackening tourist spend.
Burberry chief executive Marco Gobbetti, said: “The outbreak of the coronavirus in Mainland China is having a material negative effect on luxury demand. While we cannot currently predict how long this situation will last, we remain confident in our strategy. In the meantime, we are taking mitigating actions and every precaution to help ensure the safety and wellbeing of our employees. We are extremely grateful for the incredible effort of our teams and our immediate thoughts are with the people directly impacted by this global health emergency."
In response to the crisis, Burberry has pledged to take unspecified measures to mitigate the worst of the downturn in the expectation that the crisis will blow over.
The coronavirus crisis has already seen the likes of WPP, Publicis and IPG restrict staff travel to China.