Burberry, the renowned luxury fashion house, has made a significant announcement regarding its workforce management amidst ongoing financial challenges. The brand, famous for its distinctive camel, red, and black check pattern, has proposed to cut approximately 1,700 jobs globally. This decision aims to effectuate a substantial cost-reduction plan expected to be fully realized by 2027.
The planned job reductions would equate to nearly 20% of Burberry’s total workforce and are anticipated to impact various sectors of the company, particularly affecting employees at its Castleford manufacturing facility located in West Yorkshire. This factory is responsible for producing Burberry’s iconic trench coats, which retail at prices ranging from £1,000 to £10,000. Burberry’s chief executive, Joshua Schulman, confirmed that the bulk of job losses would stem from the company’s head office teams worldwide, predominantly in the UK where the majority of their staff are based.
In light of these changes, Mr. Schulman also mentioned that staff schedules would undergo restructuring. This includes the discontinuation of night shifts at the Castleford factory, which has been facing issues of overcapacity, rendering its current operations unsustainable. He clarified, however, that these changes are necessary to preserve UK manufacturing jobs, reassuring stakeholders of plans to invest substantially in renovating the Castleford facility in the latter part of the fiscal year.
To optimize personnel deployment, Burberry intends to align staff rosters according to peak traffic times within their stores. This restructuring will also lead to additional job reductions. Alongside workforce cuts, the company aims to achieve savings through decreased operating costs and increased efficiency in areas such as procurement and real estate management. While the job cuts are subject to a consultation process, they underscore a strategic move by Burberry to stabilize its operations during challenging market conditions.
Founded in 1856, Burberry has been manufacturing its signature raincoats in Yorkshire since 1972. Despite its rich heritage and established place in the luxury fashion landscape, the brand reported a loss of £66 million for the previous financial year. Last November, Burberry already initiated a cost-savings program projected to yield £40 million, but this recent strategy indicates a drive for combined savings amounting to £100 million by Spring 2027.
Mr. Schulman, who took over as chief executive in July of the previous year, remains optimistic about the brand’s trajectory, stating that the enduring success of their outerwear and scarf products reinforces his belief in Burberry’s potential for future growth. Despite the immediate challenges posed by a difficult macroeconomic environment, he expressed confidence that the brand’s best days are yet to come.
Investment director Russ Mould of AJ Bell commented on Burberry’s ongoing changes, categorizing them as radical initiatives as part of the company’s recovery strategy. He highlighted that Mr. Schulman, previously the head of luxury brands like Coach and Jimmy Choo, is implementing classic turnaround measures, such as significant cost reductions and a focus on the brand’s traditional strengths in outerwear, including trench coats and scarves.
The current changes at Burberry reflect a broader trend within the fashion industry, where luxury brands are grappling with shifts in consumer preferences and economic pressures. Other brands, such as Mulberry, have also announced job cuts due to declining sales, indicating a challenging environment for luxury retailers. As Burberry navigates these adjustments, it strives to maintain its iconic status while adapting to the demands of a fluctuating market.