Luxury fashion firm Burberry has said it could cut some 1,700 jobs as part of plans to reduce costs by 2027.
The British designer brand – famed for its distinctive camel, red and black check pattern – announced the proposed savings on Wednesday as it reported a £66m loss in the last financial year.
The proposed job cuts would reduce its global workforce by almost a fifth and include potential redundancies at its Castleford factory in West Yorkshire.
Burberry chief executive Joshua Schulman said the majority of job losses would come from its head office teams around the world, but said the cuts would “naturally” be focused in the UK, where most of its staff are based.
He confirmed staff rotas would be reorganised and that night shifts at its factory in Castleford, which makes trench coats priced from £1,000 to £10,000 each, would be scrapped.
“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.”
Burberry said it would align “schedules with peak store traffic” in its shops, which would result in the reduction of some jobs.
It added savings would also come from “operating expenses, with increased efficiency of spend in procurement and real estate”.
The company said the cuts were “subject to consultation where applicable”.
Burberry was founded in 1856 and has been making its famous raincoats in Yorkshire since 1972.
The designer brand previously announced £40m cost-savings programme in November, meaning it now plans to create the combined annualised savings of £100m by Spring 2027.
“The continued resilience of our outerwear and scarf categories reaffirms my belief that we have the most opportunity where we have the most authenticity,” said Mr Schulman, who was appointed chief executive in July last year.
“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,” he added.
‘Pretty radical steps’
Russ Mould, investment director at AJ Bell said Burberry’s plans were “some pretty radical steps in its continuing recovery effort”.
He said Mr Schulman, who was the former boss of Coach and Jimmy Choo, was “pulling the classic turnaround lever of cutting costs, including a drastic planned reduction in the firm’s headcount”.
“A strategy of trying to compete with higher-end rivals hasn’t worked out so it makes sense that under Schulman the company is returning to its historic strengths in classic outerwear products like trench coats and scarves,” he added.
Mr Schulman replaced former Burberry chief executive Jonathan Akeroyd after the brand saw plunging sales.
Mr Akeroyd had attempted to move Burberry more upmarket.
Once Mr Akeroyd left, chairman Gerry Murphy said Burberry would take “decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness”.
Burberry’s sales have been struggling amid weaker demand for luxury goods in general, with trading in China and the Americas seeing some of the biggest falls last year.
By BBC News
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