Burberry says it could cut 1,700 jobs worldwide by 2027. This has bolstered efforts by struggling fashion houses to cut costs after profit falls, including removing night shifts at Yorkshire raincoat plants.
The UK luxury brand announced employment cuts on Wednesday after reporting that last year’s annual pre-tax profit had dropped by 117%. The company has recorded a loss of £66 million from a profit of £383 million as it struggles with wider mal lazyness in the global luxury industry.
The company said the new plan to find £60 million in cost-cutting could impact 1,700 jobs. The cut could affect almost a fifth of its staff as Burberry employed around 9,300 people worldwide last year.
Burberry CEO Joshua Schulman said most of the cuts are in the head offices of groups around the world led by London, but the job will also be reorganizing the store’s staff Lotas and dropping one shift at Castleford’s Trenchcoat Factory. He said no significant store closures were planned.
The Castleford change, which is expected to affect around 170 highly skilled jobs, comes before “major investments” are made at the factory later this year, Schulman said.
“For a long time, we’ve been overcapacitated at the facility, but that’s simply not sustainable at this point,” he said. “We are making this change to protect UK manufacturing and have made significant investments in refurbishing our Victorian plants (later this year).”
He said Burberry had a “ambition” to increase the scale of British production “over time” and saw value in the “trench coat making tradition in the UK.”
But Darren Travis, organizer of the GMB Union, who represents the factory workers, said, “This is a sad, sad blow to these workers and Castleford itself. Burberry is the town’s biggest employer, with more than a quarter of the workforce ahead.”
Fashion houses best known for their signature trench coats have struggled in recent years due to a series of short-lived attempts to revive the brand with a variety of designers, due to the weaker luxury market. The company hired former US fashion brand coach Shulman last year as CEO last year to turn its fortunes.
One job that appears to be safe as part of Shulman’s improvements was the job of Chief Creative Officer Daniel Lee, whose role was seen as a risk under the new administration.
Shulman said he was not pleased with the progress of our team, “moving from modern British luxury to timeless British luxury,” and that Lee’s latest collection is “an extraordinary expression of timeless British luxury, and we are all excited about what we all come.”
The plan to cut costs is added to Shulman’s £40 million savings program announced in November. Burberry stocks bounced almost 20% at some point Wednesday.
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Schulman said he was “more optimistic than ever that Burberry’s best days are ahead,” but he said the first half of last year was challenging.
The group’s underlying sales fell 15% to £2.5 billion over the year until March 29th, indicating a significant improvement in the last quarter, when sales fell only 6%. The company partially denounced the decline in sales to Chinese tourists and the decline in the removal of VAT tax credits for tourist shopping in the UK.
Schulman said sales in the US have been “cranking” in recent months since the Trump administration took office, with many ups and downs.
Charlie Huggins of the Investment Broker Wealth Club said the 2025 period was “annus horibilis” for Burberry. “Gorgeous consumers around the world have significantly tightened the belts that hit the entire luxury sector, but Burberry has had a more impact than most,” he said. “Its operational implementation has left many desirable things in recent years, and brands have lost their luster and exacerbated the problems of the wider sector.”
The wider economic recession in the luxury sector has also reached sales of larger rivals, such as Kering, which owns brands such as Gucci and Balenciaga.
Burberry has lost about a quarter of its market value over the past year, while LVMH has lost about a third and Kering has dropped by more than two-fifths.