London (CNN Business)Even the best businesses in high-end retail aren’t insulated from the effects of the coronavirus pandemic.
Selfridges, the only department store named best in the world four times, is shedding 14% of its workforce as it faces its “toughest year” because of the pandemic. The UK retailer, which was founded in 1908, said it was expecting annual sales to be “significantly less” than last year, and that about 450 jobs will be axed. The chain has four stores: one on London’s Oxford Street, two in Manchester and one in Birmingham.
Selfridges said it was reviewing all non-essential costs and pausing a number of projects and initiatives. It reopened its doors last month after closing when a government-mandated lockdown began in March. Its restaurants and hair salons have also reopened, but about 30% of staff remain on a government furlough program.Sales had been increasing in recent years, and totaled £1.85 billion ($2.38 billion) for the year ending February 2019. Operating profits were squeezed as Selfridges invested heavily in the customer experience, including a 60,000 square foot accessories hall, the largest in the world, at its iconic flagship Oxford Street store.Read MoreSelfridges also invested in an Android app, a Chinese language website and a subscription delivery service.Then the pandemic dealt a hammer blow to UK high street stores as shoppers were forced to stay at home and buy online. Brands including Topshop owner Arcadia, Harrods and menswear retailer TM Lewis shed nearly 2,000 jobs in just 48 hours at the beginning of July. Since then, health and beauty retailer Boots (WBA) has announced that it will cut 4,000 jobs and close 48 optician stores, while department store chain John Lewis is shutting eight locations, putting 1,300 jobs at risk. “Like many others, we are feeling the effects and acknowledge that recovery will be slow, with sales this year forecast to be significantly less than they were in 2019,” said Selfridges group managing director Anne Pitcher. “It will, without doubt, be the toughest year we have experienced in our recent history.” Many retailers have tried to shift focus to take advantage in the surge in online shopping caused by the pandemic, which is expected to boost UK e-commerce sales this year by £5.3 billion ($6.3 billion) to £78.9 billion ($10.18 billion), according to Edge Retail Insight.But the core of Selfridges’ business has been slammed by a 28% slump in department store sales in June, and the absence of high-spending tourists. Members of Walpole, Britain’s luxury goods association, were seeing only 5% to 10% of their normal sales volume, said CEO Helen Brocklebank in a statement earlier this month.LVMH (LVMHF), which owns Louis Vuitton, Dior and Hennessy, said Monday that Europe’s contribution to group revenue fell during the six months ending in June “due to the significant reduction in tourist travel.”The group’s travel retail business, DFS, which sells duty-free goods in airports, was particularly hard hit.
“Travel retail will suffer for a number of quarters before it comes back to normal,” LVMH CFO Jean Jacques Guiony said on a call with analysts. The business is “heavily dependent on long-haul flights,” which are “unlikely to resume any time soon,” he added.— Hanna Ziady contributed to this article.
Source: edition.cnn.com
