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Burberry has warned it could shed 1,700 jobs, about 18 per cent of its global workforce, by 2027 as the UK luxury brand announced new cost cuts in an effort to turn around the business.
The company, which hired former Coach and Jimmy Choo chief executive Joshua Schulman last July to revive its fortunes, disclosed the plan as part of a push to generate an additional £60mn of savings by 2027.
It came as Burberry said it had swung to an operating loss of £3mn in the 12 months to March 29, compared with a £418mn profit the year before. Revenue fell 17 per cent to £2.5bn.
The latest cost-cutting drive would takes the planned annual savings to £100mn a year. The company said the “organisational changes” were meant to ensure Burberry was “fit for the future”.
Schulman has been tasked with arresting a decline in sales after a botched strategy to move upmarket and compete with high-end groups such as Hermès, a move that alienated shoppers. The brand has also had to contend with a broader slowdown in the global luxury market, particularly in China, the company’s main growth engine.
Schulman said on Wednesday that the brand was “still in the early stages” of its turnaround, but that he was optimistic the company’s “best days are ahead” and that it would deliver “sustainable, profitable growth over time”.
Retail sales fell by 6 per cent on a like-for-like basis in the final quarter of the company’s financial year, slightly better than analysts had expected. while like-for-like sales across the entire group fell by 12 per cent in the year. Shares rose by 6.8 per cent in early trading on Wednesday.
The chief executive has been aiming to refocus the company on classic outerwear products, such as its staple trenchcoats and scarves. He has also broadened the range of price points, including lower ones in certain categories.
