Victoria Beckham reverses decision to furlough fashion label staff

Victoria Beckham has reversed a decision to furlough 30 staff at her fashion label and said that her team’s welfare “means everything to me” after the decision to apply for public money drew heavy criticism.

Following a change of heart by the designer and her board, the application to the government scheme has been withdrawn and all employees concerned restored to their roles.

“We will not now be drawing on the government furlough scheme,” Beckham told the Guardian. “At the beginning of the lockdown the shareholders agreed with senior management to furlough a small proportion of staff. At that point we didn’t know how long the lockdown might last or its likely impact on the business. The welfare of my team and our business means everything to me.”

After going into lockdown “overnight”, the company “made decisions as best we could to try and protect our staff”, according to a spokesperson. “We’ve now reconsidered and we accept there’s a better way forward for our business. These are tough times and tough decisions and we don’t always get it right - all we can say is we are trying to protect our business and our staff.”

Income subsidies

Direct cash grants for self-employed people, worth 80% of average profits, up to £2,500 a month. There are similar wage subsidies for employees.

Loan guarantees for business

Government to back £330bn of loans to support businesses through a Bank of England scheme for big firms. There are loans of up to £5m with no interest for six months for smaller companies.

Business rates

Taxes levied on commercial premises will be abolished this year for all retailers, leisure outlets and hospitality sector firms.

Cash grants

Britain’s smallest 700,000 businesses eligible for cash grants of £10,000. Small retailers, leisure and hospitality firms can get bigger grants of £25,000.

Benefits

Government to increase value of universal credit and tax credits by £1,000 a year, as well as widening eligibility for these benefits.

Sick pay

Statutory sick pay to be made available from day one, rather than day four, of absence from work, although ministers have been criticised for not increasing the level of sick pay above £94.25 a week. Small firms can claim for state refunds on sick pay bills.

Other

Local authorities to get a £500m hardship fund to provide people with council tax payment relief.

Mortgage and rental holidays available for up to three months.

A fortnight ago, 30 of Beckham’s 120 staff received letters informing them they were to be furloughed for at least two months. Beckham, whose net worth is estimated at £335m and who had been sharing images on social media from the family’s luxury lockdown at home in Oxfordshire when the news broke, was heavily criticised for a claim which would have cost about £150,000 in government funds.

The furlough scheme has becoming a lightning rod for high emotion around how the huge economic burden of the crisis is to be shared between taxpayers and wealthy individuals and businesses.

Beckham’s reversal follows a pattern seen at Liverpool and Tottenham football clubs. Both initially announced they would furlough non-playing staff, applying to the government-funded job retention scheme for financial support, but subsequently had a change of heart.

In a letter to fans the Liverpool’s chief executive, Peter Moore, said: “We believe we came to the wrong conclusion last week and are truly sorry for that.”

However, a source close to Beckham denied that the reversal had been prompted by the backlash, saying that she “is well aware of the intense scrutiny that comes with being in the public eye, and doesn’t complain about it”.

A spokesperson for the board said that the company “now believe that with the support of our shareholders, we can navigate through this crisis without drawing from the furlough scheme”.

Online sales of Victoria Beckham clothing since lockdown have exceeded the revised forecasts drawn up by the business at the onset of the crisis, and although Britain remains in lockdown crucial links in the international supply chain are now emerging from mothballing.

All of the Italian factories which produce the label’s garments are scheduled to be up and running by 11 May. Beckham is said to be keen to get back to designing the next collection – although the catwalk schedule is currently on pause, with fashion weeks in June and July cancelled and the major September shows in London, New York, Milan and Paris likely to be scaled down, postponed, or otherwise reimagined.

The backtracking reflects signs of cautious optimism in the fashion industry, as some regions of the globe begin the process of reopening after the crisis.

Predictions that quarantine would cause seismic shifts in consumer behaviour and snuff out demand for fashion and luxury in the long term are being called into question by recent reports from China.

On 11 April, the first day of reopening, the Hermes boutique in Guangzhou took $2.7m, the brand’s highest ever single day takings. The phenomenon is being dubbed “revenge spending”.

The furore highlights the delicate position that Victoria Beckham and her brand occupy in British public life. As a designer she has a huge brand name, but a relatively small business. Against the global luxury giants against whom she competes for customers, her label is a minnow.

Having taken £30m in investment from Neo Investment Holdings three years ago, the designer and her husband own 47% of her label, with the majority owned by the board. The brand has established itself as one of the most respected and influential fashion houses on the show circuit, but has yet to turn a profit.

The family star power of “Brand Beckham” brings her label the kind of public interest most designers can only dream of. The front row line-up of David Beckham and the couple’s four children next to Anna Wintour has become an iconic fashion week image. But the Beckhams’ status brings with it an expectation that Victoria is to be judged not as a fashion designer, but as a public figure.

Before this crisis, the label is thought to have been on course to break even this year. Beckham has foregone her salary for the foreseeable future, and she and other shareholders are planning to put in more investment to keep the business functioning through the crisis.