Luxury fashion firm Burberry has announced a potential reduction of approximately 1,700 jobs as part of its comprehensive plan to cut costs by the year 2027. The renowned British designer brand, celebrated for its iconic camel, red, and black check pattern, revealed these proposed savings on Wednesday while reporting a significant £66 million loss in the last financial year.
The proposed job cuts could represent nearly a fifth of Burberry's global workforce, with potential redundancies occurring at its Castleford factory located in West Yorkshire. Burberry's chief executive, Joshua Schulman, indicated that the majority of job losses would predominantly affect the head office teams worldwide. He emphasized that the cuts would primarily focus on the UK, where the majority of their staff are employed.
As part of this restructuring, Mr. Schulman confirmed that the company's staff rotas would undergo significant reorganization. The night shifts at the Castleford factory, known for producing trench coats priced between £1,000 and £10,000, will be eliminated. "For a long time, we have had overcapacity at that facility, and that is simply not sustainable," stated Mr. Schulman. He assured stakeholders that these changes are aimed at preserving UK manufacturing, with plans for substantial investment to renovate the factory in the latter half of the year.
Burberry plans to align its production schedules with peak store traffic in its retail locations, which will inevitably lead to some job reductions. The company also indicated that savings would be achieved through enhanced operational efficiency, focusing on procurement and real estate expenditures. Importantly, Burberry mentioned that these job cuts would be subject to consultation where applicable, ensuring compliance with labor regulations.
Founded in 1856, Burberry has been manufacturing its renowned raincoats in Yorkshire since 1972. The company previously initiated a £40 million cost-saving program in November, and with the new measures, it aims to achieve a total of £100 million in annualized savings by Spring 2027. Mr. Schulman expressed confidence in the company’s future, stating, "The continued resilience of our outerwear and scarf categories reaffirms my belief that we have the most opportunity where we have the most authenticity."
Despite operating in a challenging macroeconomic environment, Mr. Schulman remains optimistic about Burberry's trajectory. Russ Mould, investment director at AJ Bell, characterized Burberry's plans as "pretty radical steps" in their ongoing recovery efforts. He noted that Mr. Schulman, who previously led Coach and Jimmy Choo, is implementing classic turnaround strategies, including substantial headcount reductions. Mould observed that Burberry’s strategy to compete with higher-end rivals has not been successful, making a return to its core strengths in classic outerwear products like trench coats and scarves a sensible decision.
