Fashion firm Mulberry is to cut its workforce by a quarter after demand for its luxury products was hammered by coronavirus.

The UK business, which is famed for its handbags, said it has launched a consultation on plans to reduce its global workforce of around 1,500 staff by 25%.

Mulberry said the majority of its stores have remained closed since it first shut sites in March in the face of the virus.

It said it has recently reopened some sites in China, South Korea, Europe and Canada, and will reopen some UK stores on June 15.

The retailer said its digital sales have been “good” during the lockdown, but “cannot fully offset the decrease in demand experienced from store closures”.

It said the job cuts have been proposed as it expects social distancing measures, lower footfall and fewer tourists to continue to hit revenues.

Mulberry said it expects the economic impact of the outbreak to result in a “gradual” recovery in overall sales.

Chief executive Thierry Andretta said: “We reacted swiftly to manage the impact of Covid-19 and continue to execute a well-developed plan to manage capital, reduce costs and maintain a robust liquidity position.

“In spite of the good performance of our sector-leading digital and omni-channel platform, and our global network of digital concessions, the shutting of all our physical stores has had, and will continue to have, a marked effect on our business.

“Launching a consultation process has been an incredibly difficult decision for us to make but it is necessary for us to respond to these challenging market conditions, protect the maximum number of jobs possible and safeguard the future of the business.

“We remain confident in the strength of the Mulberry brand and our strategy over the long term.”

It comes amid a testing period for fashion retailers, with rivals such as Debenhams, Laura Ashley and Cath Kidston tumbling into administration during the outbreak.

Shares in Mulberry fell by 5.6% to 185p in early trading on Monday.