When we recently wrote about Burberry, a British fashion brand, the company passed through the crisis, and the new president took over the rudders. At that time, there was talk of reducing hundreds of jobs. However, the problems seem to be greater than expected, because the company has just announced that by 2027 about 1,700 people will lose their jobs, it is nearly one fifth team.
Burberry shares increased on the London Stock Exchange on Wednesday by 18 percent. After the British luxury brand announced plans to dismiss 1,700 employees, i.e. about one fifth of its global workforce, to reduce costs and improve results.
In July 2024, Burberry announced that Joshua Schulman, a former head of the American brand Michael Kors, is in the position of general director. He got the task of conducting a company through a crisis, which was partly due to the results of sales in the Americas and Chinaand partly from the unsuccessful attempt to “move up on the luxury goods market”.
The British clothing brand, famous for its characteristic grille, announced the results on Wednesday and announced further savings. It turns out that in the last tax year she ended with a loss of 66 million pounds (approx. PLN 332 million).
Exemptions and reorganization in Burberry
The company announced a significant cut – by 2027 it may lose their jobs up to 1,700 people. They are to be global, what is more, they can also touch factories in native Great Britain.
Joshua Schulman said that most of the layoffs would apply to teams in the company's headquarters around the world, but added that the reductions “naturally” will focus in Great Britain, where most of the staff work.
Burberry store.Maria Surtu/Shutterstock
Schulman confirmed that employee rotations will be reorganized, and night changes in the factory in Castleford, which produces trench coats at prices from one thousand to 10,000 pounds per piece, will be liquidated.
“For a long time we had a surplus of production capacity in this plant and it is simply not balanced,” said Schulman. – But I want to say clearly that we are introducing this change to secure our production in Great Britain and we will reality make a significant investment in the renovation of this factory in the second half of the year – he emphasized.
Savings program in the British brand
Burberry has announced that it will adapt “graphics to the peak traffic intensity in its stores”, which will reduce some jobs. It has been added that the savings will also apply to “operating costs, thanks to the increase in expenditure efficiency in the area of public procurement and real estate”. It was also found that the cuts “are subject to consultations if possible.”
In November, the brand announced a savings program worth 40 million pounds, which means that it is currently planning to achieve total annual savings of £ 100 million to spring 2027.
– The constant resistance of our categories of outerwear and scarves confirms my belief that we have the most possibilities where there is the most authenticity – said Schulman. – Although we operate in difficult macroeconomic conditions and we are still at an early stage of our improvement, I am more optimistic than ever that Burberry's best days are still ahead of us – he added.
Problems of the fashion industry
Russ Mould, the director of investment at AJ Bell, said in an interview with the BBC that Burberry plans are “quite radical steps as part of constant efforts to revive.” In his opinion, Schulman “draws the classic reimbursement lever from the investment consisting in cutting costs, including a drastic reduction in employment in the company.”
– The strategy consisting in trying to compete with more expensive brands did not work, so it is not surprising that under the leadership of Schulman, the company returns to its historical strength in the field of classic outerwear products, such as trench coats and scarves – he added.
The decision to try to enter the higher price shelf was made by the predecessor of Schulman Jonathan Akerid. This, however, lost his position after two years, after The company recorded strong sales drops.
Source of the main photo: Maria Surtu/Shutterstock