Burberry cuts 1,700 jobs in global savings amid a slowdown in luxury goods
Burberry will lay off up to 1,700 jobs (nearly 18% of the global workforce) as part of a plan to stabilize costs, which aims to stabilize the business after a sharp decline in the global luxury market cut it to £66 million in pre-tax losses.
The iconic British fashion house announced the measure on Wednesday, with most of the cuts expected to come from the functions of headquarters, especially in London over the next two years. Operational changes at the Castleford plant in West Yorkshire will bring other reductions, where night shifts will be abandoned, and Rotas staff will be reorganized.
The move is part of a cost-cutting strategy led by new CEO Joshua Schulman, who joined the company's mandate in July to turn the company around. The plan aims to pay £60 million in new savings, and by the end of 2027, it will bring total annualized savings to £100 million.
Despite the scale of layoffs, Schulman is a luxury industry veteran who has held an outdated role in Jimmy Choo and coaches, maintaining his confident tone. “I'm more optimistic than ever,” he said, although he acknowledged the increasingly uncertain macroeconomic environment, partly due to geopolitical instability.
Investors seemed relieved, with shares in the FTSE 250 company up 8.1% to 894 pence.
In the fiscal year ended March 29, Burberry reported similar sales fell 12% to £2.5 billion, except for the £383 million profit of the previous year to £66 million loss, which was a sharp drop. While these numbers reflect the impact of wider industry pressure, they are not as severe as some analysts fear.
The company has been hit hard by a drop in demand in one of its most important markets. Sales in mainland China fell 15% over the year and 8% in the fourth quarter alone. The global Chinese customer base has also declined due to the mid-digit year-on-year.
Trade tensions have exacerbated headwinds. President Trump's extensive tariffs on luxury goods escalated the ongoing trade war with China, creating new uncertainty for brands that rely on global demand. A 90-day armistice between the United States and Beijing was announced this week that tensions could ease the silver lining.
Schulman’s “Burberry Forward” strategy aims to refocus the brand on its most iconic products, including windbreakers and scarves with retail value between £420 and £2,500, while also expanding its pricing structure to attract a wider consumer base.
As the global luxury sector adapts to the growing consumer landscape and political volatility, Burberry’s restructuring signaling is a difficult but necessary repositioning. Now, the brand faces the challenge of reproducing growth while staying true to its British heritage and doing it with a leaner, more focused workforce.
