Burberry, the iconic luxury fashion brand, is set to eliminate around 1,700 positions worldwide, which represents 18% of its total workforce. This decision is part of a larger strategy to reduce staff costs and return to profitability. The company is grappling with declining sales and decreased appeal among younger consumers, which has prompted the need for significant restructuring.
The brand has increased its cost-cutting target to £100 million in savings by the 2027 financial year. These savings will come from reducing ‘people-related costs,’ including the global job cuts. The company aims to implement these changes over the next two years as part of its broader organizational shift to ensure Burberry remains competitive in the future.
Following the announcement, Burberry’s stock surged by 6.75%, or 55.80p, reaching 882.60p. However, the retailer’s shares have dropped by approximately 25% over the past year. Investors remain cautious due to a history of unsuccessful turnaround efforts at Burberry, with some viewing this latest plan as a last opportunity for the brand to recover.
CEO Joshua Schulman revealed that in addition to the £40 million already planned for savings, a further £60 million in cost reductions will be implemented. This brings the total savings target to £100 million over the next two years, though it will cost about £80 million to achieve these reductions.
In its recent financial report, Burberry revealed a 17% drop in annual revenue to £2.5 billion for the year ending March 19. The company posted an operating loss of £3 million, a stark contrast to the £418 million profit it recorded the previous year. A pre-tax loss of £66 million was reported for the 12 months ending March 29, compared to a £383 million profit in the previous year. Despite these challenges, Burberry’s fourth-quarter sales decline of 6% was better than expected, signaling a possible recovery in the coming months.
Looking ahead, Schulman expressed optimism, stating that the brand’s campaigns would be ramped up as the Autumn and Winter collections are launched in stores, aiming to improve brand sentiment.
