Burberry (BRBY.L) has unveiled plans to axe nearly a fifth of its global workforce, including UK factory workers, in a bid to slash costs and return to profit.

The London-based luxury fashion brand has announced proposals to cut about 1,700 jobs worldwide over the next two years.

The majority of reductions are set to come from head office-based teams around the world, led by the UK where there is a bigger proportion of employees.

Changing shift patterns to focus on meeting demand during busy hours will also result in some retail job losses.

It is proposing to drop the night shift at its Castleford facility in West Yorkshire, which makes its staple trench coats that sell from about £1,000 to £10,000 apiece.

This is expected to affect about 25% of roles, which is believed to amount to around 150 jobs, ahead of plans to renovate the factory.

Burberry chief executive Joshua Schulman said: “For a long time we have had overcapacity at that facility, and that is simply not sustainable.

“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.

“Our intention is that we make our British heritage raincoats in the UK for many generations for come.”

Burberry hired about 9,170 employees around the world last year, so reducing about 1,700 roles would equate to about 18.5% of its total workforce.

It launched a £40 million cost-cutting programme in November after first sinking to a loss.

On Wednesday, Burberry said it wants to make an additional £60 million of savings by the 2027 financial year, which would bring the target to a combined £100 million.

It hopes these savings will partly come from reducing “people-related costs”, which will be focused on the UK where the company houses teams including its designers.Burberry said it will be ‘ramping up’ its marketing campaigns (Burberry/PA)

The fashion firm has been affected by a slump in demand for luxury goods, particularly across Asia, and more recently concerns over the impact of higher US tariffs on the business have surfaced.

It reported a pre-tax loss of £66 million for the year to March 29, sinking from a profit of £383 million the prior year.

Retail comparable store sales fell 12% year on year, with a 16% slump in sales across Asia dragging on the total.

But Burberry said trading improved over the second half of the latest year, compared with the first half, which gives it “confidence” its strategic plan is starting to pay off.

Demand for its popular staple styles including trench coats and scarves meant the retailer’s outerwear category continued to perform better than other products, like leather bags and accessories.

Story Continues

And Mr Schulman said the brand will be “ramping up the frequency and reach” of its marketing campaigns, which have recently featured the likes of actors Olivia Colman and Barry Keoghan.

Shares in Burberry surged by nearly 10% on Wednesday as investors welcomed the group’s plans to cut costs and return to profitability.

Susannah Streeter, head of money and markets for Hargreaves Lansdown, said: “Burberry is dealing with difficult conditions in the mid-market luxury sector.

“It doesn’t have the same pull of its ultra-luxe rivals, and aspirational shoppers are more cautious without the deep pockets of wealth to keep them insulated.”

She added: “Although the most onerous tariffs have been rolled back, consumer confidence in China, which has been the powerhouse for luxury brands, will take time to be restored, which could also slow down Burberry’s progress.”

View Comments