Burberry is set to cut approximately 1,700 jobs globally, roughly 18% of its total workforce, as part of a major effort to slash staff expenses and steer the company back to profitability.
The decision comes amid declining sales and a diminishing connection with younger consumers, posing significant challenges for the luxury fashion brand.
The retailer has raised its annual cost-saving target to £100 million by the 2027 financial year. A significant portion of these savings will come from reduced “people-related costs,” potentially affecting around 1,700 roles over a two-year period.
This latest cost-cutting initiative would trim nearly a fifth of Burberry’s workforce. The company described the changes as “organisational” and aimed at ensuring it is “fit for the future.”
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Following the announcement, Burberry shares rose by 6.75%, or 55.80p, to 882.60p. However, the stock has declined by about 25% over the past year.
“Investors have witnessed several unsuccessful turnaround attempts by Burberry in recent years. This one feels like a last-ditch effort,” commented Charlie Huggins, portfolio manager at Wealth Club.
On Wednesday, CEO Joshua Schulman outlined plans for an additional £60 million in cost cuts, on top of the £40 million previously announced, bringing the total to £100 million over the next two years. The restructuring will cost about £80 million to implement.
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For the fiscal year ending March 19, Burberry reported a 17% drop in revenue to £2.5 billion and an operating loss of £3 million, a sharp contrast to the £418 million profit recorded the previous year. Pre-tax losses totaled £66 million, compared to a £383 million profit the year before.
Fourth-quarter comparable sales fell 6%, performing slightly better than analysts’ forecasts of a 7% decline.
The company acknowledged a “challenging first half” and cited a “difficult macroeconomic backdrop.”
However, Schulman expressed optimism, stating:
With improvement in brand sentiment, we will be ramping up the frequency and reach of our campaigns as our Autumn and Winter collections arrive in store.
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