‘Simply not sustainable’: Burberry warns 1700 jobs at risk after annual loss

One of the world’s biggest luxury brands is set to slash fifth of its global workforce after suffering a massive annual loss.

Burberry could shed almost a fifth of its global workforce by 2027, after the embattled fashion house suffered a massive annual net loss.

The British label, founded in 1856 and beloved for its distinctive camel, red and black chequered pattern, is in the midst of a turnaround plan to help boost sales and cut costs as the global luxury sector struggles with weak consumer demand.

Burberry’s net loss stood at £75 million in the 12 months to the end of March, it said in a statement, compared to a profit of £270m one year earlier. Revenue slid 17 per cent to £2.46 billion.

Further cost-saving measures were announced on Wednesday, targeting additional savings of £60m in the next two years, which would impact around 18 per cent of its workforce, or 1700 people.

“While we are operating against a difficult macroeconomic backdrop and are still in the early stages of our turnaround, I am more optimistic than ever that Burberry’s best days are ahead,” chief executive Joshua Schulman said.

Pedestrians pass the Burberry store as they walk along Regent Street in central London. Picture: Niklas Hallen/AFP

The bulk of the cuts will affect office-based roles globally, with the brand’s UK headquarters to bear the brunt. Retail positions will also be affected, while the night shift Burberry’s factory in Castleford, West Yorkshire – where its iconic trench coats are produced – will be axed, resulting in roughly 150 job losses.

“For a long time we have had overcapacity at that facility, and that is simply not sustainable,” Mr Schulman said.

“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 to come.”

‘Our customers are responding to our timeless British luxury brand expression.’ Picture: Supplied/Burberry

Kendall Jenner walks during the Burberry S/S19 show in September 2018. Picture: Niklas Hallen/AFP

Mr Schulman has vowed to win back customers with a renewed focus on outerwear, which outperformed its other products, according to the group’s earnings statement.

“Our customers are responding to our timeless British luxury brand expression,” he said.

“With improvement in brand sentiment, we will be ramping up the frequency and reach of our campaigns as our autumn and winter collections arrive in store. The continued resilience of our outerwear and scarf categories reaffirms my belief that we have the most opportunity where we have the most authenticity.

“While we are operating against a difficult macroeconomic backdrop and are still in the early stages of our turnaround, I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time.”

Burberry did warn, however, that the economic environment has become “more uncertain in light of geopolitical developments”, as the fallout from US tariffs threatens to dampen consumer confidence.

The troubled group is undergoing a turnaround plan to help boost sales and cut costs as the global luxury sector struggles with weak consumer demand, notably from China. Picture: Henry Nicholls/AFP

The news of cost-cutting plans and a better-than-expected fourth quarter sent shares in Burberry soaring more than eight per cent in morning deals on London’s FTSE 250 index.

Burberry exited London’s top-tier FTSE 100 index in September after 15 years, with analysts citing strategic mistakes and weak demand from China.

“Without question, there is some momentum building,” said Richard Hunter, head of markets at Interactive Investor.

“Burberry will want to consign the past year to the history books as soon as possible … but the new strategy will take time to filter through.”

Despite Wednesday’s surge, the group’s share price remains down around 25 per cent over the past 12 months.

“The refreshed fashion strategy … is helping to stem the decline, but patience is wearing thin,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Burberry “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.

The Asia-Pacific region saw Burberry’s largest decline in comparable store sales in the reported year, with turnover in mainland China falling 15 per cent.

China is the world’s biggest spender in the luxury sector, accounting for half of global sales.

But as the country’s post-pandemic recovery falters, consumption has flagged, sending jitters across the globe.

Originally published as ‘Simply not sustainable’: Burberry warns 1700 jobs at risk after annual loss