Burberry announces thousands of job cuts as fashion house’s profits falter

Luxury fashion house Burberry has announced plans to cut nearly a fifth of its global workforce, impacting approximately 1,700 jobs over the next two years. The cost-cutting measure aims to bolster profitability and streamline operations.

The majority of the cuts will target office-based roles globally, with the UK headquarters expected to bear the brunt of the reductions due to its larger employee base. Retail positions will also be affected, with shift pattern adjustments planned to align staffing with peak demand periods.

Burberry's Castleford factory in West Yorkshire, known for producing the brand's iconic trench coats, will see the elimination of its night shift.

This move, anticipated to impact around 150 jobs (approximately 25 per cent of the factory's roles), comes ahead of planned renovations at the facility. The trench coats manufactured at the site retail for between £1,000 and £10,000.

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 per cent 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.

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 per cent year on year, with a 16 per cent 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.

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 per cent 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.”