Burberry is seeking to deal with a sales slowdown in its Asian business by dramatically reducing the size of its Hong Kong flagship store.
The luxury retailer is in the process of renegotiating leases with landlords and has agreed a lease restructuring for its flagship store at Hong Kong’s Pacific Place complex.
Burberry chief financial officer Carol Fairweather said: “During the next financial year the store will be reduced in size while significantly boosting sales per square foot.”
The Pacific Place store currently occupies two floors, but Burberry has decided to move out of the bottom level.
Asia Pacific delivered a mid single-digit percentage year-on-year sales decline in the half ending September 30.
The reduction in size of its Hong Kong store comes against a backdrop of significant belt tightening at Burberry.
Fairweather said: “In the short term we have accelerated action to control costs, from only recruiting business-critical roles, to reducing travel and expenses and other discretionary costs.”
Burberry has made £30m in savings from reducing performance-related pay and saved £20m from cracking down on discretionary costs.
In an effort to improve efficiencies, the retailer is also merging its Burberry Prorsum, London and Brit brands under one name – Burberry.
Fairweather said this would not result in the closure of stores with the Prorusm or Brit fascias.
She explained: “We only have a handful and we will not be closing stores if they are profitable, this [merger] does not come into place until November 2016 and we will not be closing any stores we hadn’t planned on closing.”
Fairweather also denied the significant reduction in size of its Hong Kong flagship was a sign that its stores are overspaced.