Burberry to Cut Workforce Amid Global Luxury Market Struggles

Burberry, the British luxury fashion house, has announced plans to cut up to 1,700 jobs, representing nearly 18 per cent of its global workforce. The cuts will primarily impact head office roles, including its London headquarters, and staff rotas, alongside the elimination of the night shift at its Castleford factory in West Yorkshire.

The decision comes as the company wrestles with challenging market conditions in the global luxury sector. Under the leadership of Joshua Schulman, who became CEO last July, Burberry is aiming to reduce costs by £60 million by the end of 2027. This forms part of a broader strategy to strengthen profitability and drive annual cost savings to £100 million.

Despite reporting a pre-tax loss of £66 million in the year to the end of March — a significant fall from the £383 million profit recorded the previous year — Schulman remains optimistic about the company’s future. The fashion house’s revenue fell by 12 per cent to £2.5 billion, although this decline was less severe than analysts had anticipated. Shares rose by 16 per cent during the afternoon trading session, reflecting a cautious boost in investor confidence.

Burberry’s profitability has also been hindered by a slowdown in one of its most critical markets, China. Sales in mainland China dropped 15 per cent in the past year and were down 8 per cent in the fourth quarter alone. Trade tensions and sweeping tariffs between the United States and China have exacerbated the issue, impacting the brand’s ability to maintain growth in key global markets.

Schulman introduced the “Burberry Forward” strategy to revitalise the brand by refocusing on staple items, such as trench coats and scarves, which have historically defined the company’s reputation. By introducing broader pricing bands, Burberry hopes to attract a wider customer base while ensuring the clearance of outdated inventory, which had caused operational inefficiencies in recent years.

The CEO acknowledged Burberry’s prior missteps, including an overemphasis on higher-end luxury under his predecessor, Jonathan Akeroyd, which alienated part of its customer base. Schulman’s plan is to position Burberry as a brand that bridges the gap between premium European and accessible American luxury, seeking relevance within a highly competitive market.

Although analysts at Bernstein suggest that the company’s turnaround plan will begin to show significant results later in the year, broader economic uncertainties could limit progress. The recent 90-day truce in the US-China trade war offers some hope of market stabilisation for Burberry and other global luxury brands. Targets to increase revenue to £3 billion remain ambitious, and analysts predict this milestone may not be achieved until the late 2020s.

The substantial fall in Burberry’s share price over the past year has relegated the company from FTSE 100 status to the London mid-cap index, heightening speculation about a potential takeover. Private equity buyers are reportedly eyeing Burberry as a valuable turnaround opportunity, capitalising on its storied history while driving higher profits through more efficient operations.

Schulman, alongside Burberry’s new creative director Daniel Lee and finance chief Kate Ferry, is working to cement a turnaround before any takeover proposals emerge, hoping to once again position the brand as a dominant player in the global luxury sector.