Burberry, the UK’s only global luxury brand, is to cut around 1,700 jobs worldwide over the next two years after reporting a steep financial loss.
The company lost £66m in pre-tax profit in the year ended in March as luxury goods sales fell across the world and the company weathered an “uncertain” environment and a “difficult macroeconomic backdrop”.
A year earlier, it recorded £383m in profit.
Money blog: £30 broadband rule explained
It’s suffered in recent years with the share price falling to such an extent the business was removed from the FTSE 100, the index of most valuable companies listed on the London Stock Exchange.
Despite the financial performance, the company was upbeat, with chief executive Joshua Schulman saying “I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time”.
What cuts are being made?
Luxury store Harrods is latest retail victim of cyber attackers
Hundreds of jobs at risk as The Original Factory Shop launches survival plan
Hobbycraft to axe stores and jobs in radical restructuring
The retailer did not specify any shop closures – in the past year, it closed 26 and also opened 26 stores – but did highlight shift cuts and consolidations.
“We don’t have a store closing programme, per see,” Mr Schulman told investors
The night shift at Burberry’s Castleford factory will be cut, it proposed, saying the shift has resulted in overproduction.
“Significant” investment in the facility will be made, however, as the ambition is to scale up British production “over time”, Mr Schulman said.
Changes to the retail network across the world will be made with shop staff being scheduled around “peak traffic”.
Burberry will be “realigning” shop staff, he said, “so that we can offer the best service” at the busiest times.
Listen to The World with Richard Engel and Yalda Hakim every Wednesday
There will also be a “simplification” of Burberry’s regional structure and a “rebalancing” of central and regional responsibilities to reduce duplication and “accelerate decision making” through the retail network.
But the majority of changes will be made to “office space teams” around the world, the CEO said.
Commercial and creative teams have already been consolidated, Burberry’s annual results said.
What’s gone wrong?
Aside from the global slowdown in luxury goods sales over recession fears, additional headwinds have come in the form of President Trump’s tariffs.
“Clearly, the external environment has become more challenging since mid-February”, Mr Schulman told investors.
Please use Chrome browser for a more accessible video player
Tariff risks were higher than first planned, the annual results said.
It led the US market to be described by Mr Schulman as “choppy” since February when Mr Trump began announcing tariffs on Mexico, Canada and China, as well as on goods such as steel and cars.
Sales also fell in the Asia Pacific region by 16%, the results showed.
Be the first to get Breaking News
Install the Sky News app for free
Criticism was levelled at the 2021 British government decision to withdraw VAT refunds for overseas visitors, “which has made the UK the least competitive destination in Europe for tourist shopping”, the results read.
“Business in our UK home market continues to be seriously impacted” by the move.
