Burberry shuts Chinese stores amid virus fallout
● British group warns of impact on demand for goods ● News adds to fears of slowdown in Chinese growth
Burberry, the luxury British fashion house famous for its coats, has shut 24 of its 64 stores in mainland China amid the growing coronavirus panic.
The group said it was taking action to ensure that staff remained safe. But it warned investors that the outbreak was having a “material negative effect” on demand for luxury products.
The London-headquartered fashion firm, which is renowned for its checked pattern, stressed that it supported efforts by the Chinese government to contain the deadly virus. It also noted that the impact on its latest full-year financial results would be limited as the period is almost over.
The business also relies on strong sales to Chinese tourists in Europe, and elsewhere. It said those sales have so far been more resilient.
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.”
Professor Qing Wang, an expert on the Chinese economy at Warwick Business School, said: “The world relies on China, not just as an exporting nation, but as an increasingly important consumption market.
“While small businesses and tourism in China will be hardest hit by coronavirus, it will also have an impact on multinational companies that view China as a key market, such as Burberry, and the car industry, which relies on Chinese-made parts to keep its global supply chains operating smoothly.
“Coronavirus is likely to have a much greater impact than the SARS outbreak in China in 2003. Then China had just joined WTO [the The World Trade Organisation] and its economy and trade relations with the US were on an upwards trajectory.”
It is not the first time that Burberry has been impacted by major events in the region in the last 12 months.
The retailer took a hit from the anti-government protests in Hong Kong. Its stores in the city state used to account for some 8 per cent of global sales. That has since halved as Chinese tourists elected not to visit while protesters were on the streets.
More than 630 people are thought to have died in the China’s coronavirus outbreak, authorities said yesterday. Meanwhile, Japan announced it had identified a further 41 cases of the virus.