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Burberry closes one in three Chinese stores after coronavirus outbreak

Chinese big spenders are one of the company’s most important client bases.

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Tourists are still spending in European Burberry stores, the company said (Steve Parsons/PA)

Tourists are still spending in European Burberry stores, the company said (Steve Parsons/PA)

Tourists are still spending in European Burberry stores, the company said (Steve Parsons/PA)

Burberry, the luxury retailer famous for its coats, has shut 24 of its 64 stores in mainland China as fears over a growing coronavirus outbreak continue to grip the country.

The company 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.

Burberry said it supported efforts by the Chinese government to contain the virus. It also told shareholders that the effects on 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 these sales have so far held up better, “but given widening travel restrictions, we anticipate these to worsen over the coming weeks”.

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.”

It is not the first time that Burberry has been hit by major events in the region in the last 12 months.

A worker sprays disinfectant at a Chinese food store
A worker sprays disinfectant at a Chinese food store (AP/Ahn Young-joon)

The retailer has taken a serious hit from the anti-government protests in Hong Kong. Its stores in the city state used to account for around 8% of global sales. That has since halved as Chinese tourists elected not to cross to the island while protesters were on the streets.

More than 630 people are thought to have died in China’s coronavirus outbreak, authorities said on Friday. On Thursday a doctor who was among the first to sound the alarm on the deadly virus succumbed to the illness.

Dr Li Wenliang, 34, had been in trouble with China’s hard-line authorities for “spreading rumours” about the virus in December.

Meanwhile, Japan announced it had identified a further 41 cases of the virus.

PA