Burberry to cut up to 1,700 jobs worldwide after £3m loss
The luxury fashion brand said it is hiking its cost-cutting target to £100 million of savings by the 2027 financial year.
Burberry has announced plans to cut a potential 1,700 jobs worldwide as part of efforts to slash staff costs and return the luxury fashion brand to a profit.
The proposals will cut about 20% of its global workforce, including job losses at its Castleford factory in West Yorkshire.
The company said it is hiking its cost-cutting target to £100 million of savings per year by the 2027 financial year.
These savings will partly come from a reduction in “people-related costs”, the firm said, which could affect around 1,700 jobs globally over the two-year programme.
Burberry’s chief executive Joshua Schulman said the majority of the reductions will come from its head office-based teams around the world.
These would “naturally” be focused in the UK, where there is a bigger proportion of employees.
In shops, plans to “align schedules with peak store traffic” will result in the reduction of some staff.
Mr Schulman also confirmed the company has proposed scrapping the night shift at its Castleford factory, which makes Burberry’s trench coats which sell from about £1,000 to £10,000 apiece.
The proposals will result in the reduction of about 25% of the company’s UK roles.
“For a long time we have had overcapacity at that facility, and that is simply not sustainable,” Mr Schulman said.
“But I want to be very clear that we are making this change to safeguard our UK manufacturing, and in fact we will be making a significant investment to renovate this factory in the second half.
“Our intention is that we make our British heritage raincoats in the UK for many generations for come.”
The British brand revealed it had tipped into an operating loss of £3 million in the year to March 29, swinging from a profit of £418 million the previous year.
However profits on an adjusted basis, which strips out what Burberry views as one-off costs, came in at £26 million – higher than the £11 million some analysts had been expecting.
Retail comparable store sales fell 12% year-on-year, with a 16% slump in sales across Asia dragging on the total.
Burberry said business in the UK is being “seriously impacted by the withdrawal of VAT refunds for overseas visitors in 2021, which has made the UK the least competitive destination in Europe for tourist shopping”.
But more spending from local customers partially offset a decline in tourist spending over recent months.
Mr Schulman told investors: “While we are operating against a difficult macroeconomic backdrop and are still in the early stages of our turnaround, I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time.”
The fashion firm has been struggling against a slump in demand among shoppers in China, one of its biggest markets, which has been dragging heavily on sales.
It launched a £40 million cost-cutting programme in November after first sinking into a loss.
On Wednesday, Burberry said it wants to make an additional £60 million of savings by the 2027 financial year, which would bring the target to a combined £100 million.
The brand said sales had improved over the second half of the latest year, compared with the first half, which gives it “confidence” its strategic plan is starting to pay off.
Demand for its popular staple styles including trench coats and scarves meant the retailer’s outerwear category continued to perform better than other products.
Mr Schulman said Burberry will be “ramping up the frequency and reach” of its marketing campaigns.
It follows the brand enlisting the likes of actors Olivia Colman and Barry Keoghan for new celebrity campaigns over the past year.
