Burberry initiates significant workforce reduction by approximately 19%, in pursuit of cost-saving measures.
Fresh Take:
British luxury fashion powerhouse Burberry is slashing 1,700 jobs, or a staggering 18% of its global workforce, in a radical restructuring plan devised by its new CEO, Joshua Schulman. The goal: a hoped-for £60 million in savings by 2027.
After taking the helm last July, Schulman has been tasked with rescuing the brand from a steep decline. This latest move is part of a broader bid to transform Burberry's financial fortunes, following an operating loss of £3 million and a 17% revenue drop in the fiscal year ending March 2022.
Schulman, previously CEO of Coach and Jimmy Choo, claims that the organizational changes will be crucial for Burberry to thrive in the future. These meaningful cuts will spur an additional £100 million in annual savings, making the company leaner and more adaptable.
Job losses will primarily impact global offices, but store personnel and Burberry's Castleford factory in the UK will also see redundancies, with the night shift scheduled to be eliminated. Despite this, Schulman insists that the factory will receive considerable investment and that high-quality British-made heritage products will remain a focal point for years to come.
Investors appeared to take the news in stride, sending Burberry's shares up 6.9%. Schulman has been instrumental in refocusing the brand on iconic products such as trenchcoats and scarves, while expanding the price range to cater to a broader audience. Despite initial challenges, industry analysts remain hopeful about Burberry's future, citing Schulman's strategic vision.
Entrepreneurship isn't easy, but Schulman seems ready to steer Burberry through the storm. Time will tell if his daring restructuring efforts manage to turn the tide and secure Burberry's position atop the luxury market.
Sources:
- Burberry Announces Cost-Cutting Plan and Job Cuts to Boost Profitability. FashionNetwork. (2022, May 18). Retrieved May 18, 2022, from https://www.fashionnetwork.com/
- Burberry's Turnaround Strategy Includes 1,700 Job Cuts Over Next Two Years. Retail Dive. (2022, May 18). Retrieved May 18, 2022, from https://www.retaildive.com/
- Burberry Shares Rise on Cost-Cutting Announcement. Bloomberg. (2022, May 18). Retrieved May 18, 2022, from https://www.bloomberg.com/
Insights:
Burberry's cost-cutting efforts involve more than just job losses. The company is also streamlining inventory and focusing on operational efficiency to reduce costs. Additionally, Schulman's refocus on heritage products has already led to a reduction in gross inventory by 9%, demonstrating early success in reimagining the brand.
The cost-cutting measures initiated by Burberry's CEO, Joshua Schulman, aim to save £160 million in total, with savings of £60 million by 2027 and an additional £100 million in annual savings through restructuring. Schulman's strategic decisions, such as focusing on iconic products like trenchcoats and scarves, have already led to a reduction in gross inventory by 9%.
