Burberry is ready to reduce up to 1,700 jobs, 18% of its world workforce, as part of an outstanding cost savings plan aimed at stabilizing the business after a strong fall in the global luxury market pushed it to a previous tax or £ 66.
The iconic British fashion house announced the measures on Wednesday, and most of the cuts are expected to come from functions of the central office, partly in London, around the next two years. Additional reductions will come from operating changes in their Castleford factory in West Yorkshire, where the night shift will be discarded and broken staff reorganized.
The measure is part of a cost reduction strategy led by the new executive president Joshua Schulman, who joined in July with the mandate of changing the company. The plan aims to deliver £ 60 million in new savings, which carries the total annualized savings to £ 100 million by the end of 2027.
Despite the scale of the cuts, Schulman, a veteran of the luxury industry with papers in Jimmy Choo and Coach, maintained a safe tone. “I am more optimistic than Burberry’s best days are ahead,” he said, although he recognizes the increasingly uncertain macroeconomic environment, driven in part by geopolitical instability.
Investors seemed calm, with shares of the FTSE 250 company that increased 8.1% to 894p in the morning trade.
For the financial year on March 29, Burberry reported a 12% decrease in sales similar to £ 2.5 billion, along with a strong swing of a profit of £ 383 million the year before a loss of £ 66 million. While the figures reflect the impact of the widest pressures of the industry, they were not how some analysts feared.
The company has been affected by the fall in demand in China, one of its most important markets. Sales in Continental China fell 15% during the year, with an 8% drop only in the fourth quarter. The Global Chinese client group also decreased by a half annual average digit percentage year after year.
Commercial tensions have been added to winds against. The radical tariffs of President Trump on luxury goods intensified the current trade war with China, creating a new uncertainty for brands that depend on the global demand. A 90 -day truce between the United States and Beijing announced this week has sacrificed a ray of hope that tensions can facilitate.
Schulman’s “Burberry Forward” strategy aims to rename the brand in its most emblematic products, including gabardines and scarves, which are sold between £ 420 and £ 2,500, while expanding its prices to attract a broader consumer.
As the global luxury sector fits a more cautious consumption panorama and a growing political volatility, Burberry’s cooling indicates a difficult but necessary repositioning. The brand now faces the challenge of reviving growth while it remains faithful to its British inheritance, and doing it with a thinner and more focused workforce.
Jamie Young
Jamie is a senior reporter of Business Matters, who brings more than a decade of experience in commercial reports of the United Kingdom. Jamie has a business administration title and participates regularly in conferences and industry workshops. When he does not inform about the last business development, Jamie is passionate about the mentoring of promising journalists and businessmen to inspire the next generation of business leaders.
