Burberry said it could lay off 1,700 jobs worldwide by 2027, including the removal of its entire night shift at its Yorkshire raincoat factory - as struggling fashion houses continue to boost its efforts to reduce costs after profits fall.
British luxury brands announced the work on Wednesday after annual pre-tax profits fell 117% in the last fiscal year. The company lost £66 million, down from £383 million in profits due to wider discomfort in the global luxury industry.
The company said a new plan to find a cost saving of £60 million could impact 1,700 jobs. Last year, Burberry hired about 9,300 employees around the world, so layoffs could affect almost one-fifth of its employees.
Burberry CEO Joshua Schulman said most of the cuts will be headquarters offices around the world led by London, but Jobs will also drop a shift by restructuring Rotas in the store and dropping a shift in its Trench Coat Factory in Castleford. He said there are no plans to close a large number of stores.
Schulman said the changes in Castleford are expected to affect about 170 highly skilled jobs, which will be conducted before "large investment" in the factory in the second half of this year.
“For a long time, we have overcapacity at the facility, which is simply unsustainable,” he said. “We are making this change to protect our UK manufacturing industry and will make substantial investments in the renovation of our Victorian factory (later this fiscal year).
He said Burberry had "ambitious" to increase the scale of UK production and saw value in "the tradition of making trenches here in the UK".
But, Darren Travis, a GMB union organizer representing factory workers, said: "It's a sad, sad blow for these workers and Castleford itself. Burberry is the town's largest employer, and more than a quarter of the workforce." Transparent
The fashion house is known for its iconic ditch coats, and has been backed up with different designers in recent years due to a weak luxury market and a series of brief attempts. The company hired Schulman, former boss of American fashion brand coaches, as CEO last year in an attempt to turn his fortunes around.
One of the jobs that seems safe as part of Schulman’s transformation is the work of Chief Creative Officer Daniel Lee, whose role is considered a risk under the new regime.
Schulman said he was “not satisfied with the progress our team has made”, moving Burberry from “modern British luxury to timeless British luxury”, Lee’s latest collection is “an extraordinary expression of timeless British luxury, and we are all very excited about what is about to happen.”
The cost-cutting plan is on top of a £40 million savings plan announced by Schulman in November. Burberry stock exploded nearly 20% at some point on Wednesday.
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Schulman said he was “more optimistic than ever, even though he said the first half of the first half had been challenging in the last fiscal year.
The group's base sales fell 15% to £2.5 billion for the year on March 29, but these figures show that sales fell only 6% in the last quarter, a figure that improved significantly. The company blamed the low sales volume of Chinese tourists and canceled the VAT reduction for British tourists shopping after Brexit.
Schulman said that in recent months, sales in the United States have been “unstable” and that sales have been a lot since the Trump administration took office.
Charlie Huggins of the Investment Broker Fortune Club said the 2025 period is Burberry's "Annus Horribilis". “Luxury consumers around the world have greatly tightened belts throughout the luxury sector. But Burberry has a greater influence than most,” he said. “In recent years, its operational execution has been imminent, and the brand has lost its luster, complicating the issues of the wider sector.”
The downturn in the luxury industry has also hit sales of larger competitors with brands like Gucci and Balenciaga, as well as LVMH, which owns Louis Vuitton and Christian Dior.
Over the past year, Burberry has lost about a quarter of its market cap, while LVMH has lost about a third, while Kering has dropped more than two-fifths.