By Lina Saigol and Rupert Steiner
Luxury fashion group Burberry has donated more than 100,000 pieces of personal protection equipment for medical and care workers after it turned its trench coat factory in Castleford in northern England, into a manufacturing site.
The FTSE 100-listed company, renowned for its distinctive checked coats and scarfs, said on Friday that it is also sourcing surgical masks through its supply chain and supplying them to the National Health Service and charities such as Marie Curie, which provides nursing care for families living with terminal illnesses in the U.K.
“We have stopped making trench coats at this factory and are making non surgical gowns,” a spokesman for Burberry /zigman2/quotes/205386705/delayed UK:BRBY -0.95% told MarketWatch
Burberry also said that its board of directors and senior leaders have taken a voluntary 20% pay cut in their base salary from April through June, with the equivalent cash amount to be donated to the Burberry Foundation COVID-19 Community Fund.
The fashion group will continue to maintain base pay for all employees who are unable to fulfill their roles because of store or site closures. and said it would not rely on government support for jobs in the U.K. where more than a third of its staff are based.
“While we continue to take mitigating actions to contain our costs and protect our financial position, we are also committed to safeguarding jobs and supporting the relief efforts during this global health emergency,” Burberry chief executive Marco Gobbetti said in a statement .
All of Burberry’s stores in the U.K. remain closed as part of the country’s nationwide lockdown to control the spread of the coronavirus.
Shares in Burberry fell almost 4% on Friday in early morning trading in London.
“Luxury fashion giant Burberry appears to have adopted a refreshing and welcome approach to the closure of its stores and its employees,” Michael Hewson, chief market analyst at CMC Markets U.K., said.
U.K. Chancellor Rishi Sunak said on April 20 that more than 140,000 companies employing a total of about a million workers have applied for help to pay their wage bill through the government’s job retention scheme on its first day of operation. The scheme allows employers to temporarily lay off workers and claim up to 80% of their salaries from the state, up to a maximum of £2,500 a month.
In a trading update on March 19, Burberry told investors that sales in the final weeks of the month would plummet by up to 80% as the impact of the coronavirus crisis on stores and luxury shopping spread to Europe.
The fashion group was hit early on in February by the onset of virus when its sales in China, which account for about 40% of its group total, declined sharply. In March, it said that trading in the country has started to improve with the reopening of most of its stores, but that sales in EMEIA (Europe, Middle East, India and Africa) and the Americas have fallen materially in recent weeks.
However, it said it had £600 million of cash on its balance sheet and a £300 million revolving credit facility, and was taking steps to contain costs and protect its financial position, including renegotiating rents, restricting travel and reducing discretionary spending.
On Friday, analysts at Bank of America noted that the official China purchasing managers index has rebounded above 50 in March, following the sharp February slowdown, and COVID-19 cases in Italy have started to stabilize.
They identified Burberry — a global luxury company trading at a meaningful discount to the sector and “offering brand turnaround optionality” — as a potential stock for investors wanting to position for a recovery in growth momentum in the second half of the year.