High-end fashion brand Burberry faces potential job cuts of approximately 1,700 positions.
Heads Up: Job Cuts Acoming at Burberry
Grit your teeth, folks! Up to 1,700 jobs worldwide could go, Burberry's latest announcement reveals. The luxury brand is staring down an operating loss of £3 million for the fiscal year wrapped up in March. And it's not looking so hot in China, either.
Dating back to 1856, Burberry's fame extends to its trench coats, plaid scarves, and high-end items. Its previous fiscal year boasted an operating profit of a whopping £418 million. But, as luck would have it, the focus now shifts to cutting costs. The ultimate goal: saving £100 million yearly by fiscal year 2027.
What's the catch? Bite the bullet, as it will entail reducing personnel costs, among other measures. Approximately one-fifth of jobs could be axed, according to British news agency PA. But don't despair! CEO Joshua Schulman pointed to a bumpy macroeconomic landscape, yet remained hopeful the company would secure sustainable, long-term growth.
Now, let's dive into the nitty-gritty of Burberry's survival strategy:
- Workforce Reduction: Say goodbye to 1,700 jobs by 2027, which translates to a chunky 18-20% of the workforce. It's executives, retail workers, and those at its Castleford factory in England that bear the brunt of these cuts. Reducing "people-related costs" is the name of the game, contributing significantly to the savings target.
- Smart Spending: Along with workforce reductions, Burberry aims to trim procurement and real estate expenses. Efficient operations across these areas are a key piece of the puzzle to save £60 million over the next two years.
- Turnaround Plan: The cost-saving measures are part of CEO Joshua Schulman's turnaround plan for Burberry. The strategy centers around revamping the product focus, leaning towards outerwear such as its classic trench coat while phasing out handbags. The restructuring targets financial stability for the brand amid a harsh luxury market environment and lackluster demand from consumers in China.
- One-Time Costs: Expect restructuring costs related to layoffs to swell to around £80 million, mostly involving cash payments for severance.
So, brace yourselves, folks! Burberry's £100 million cost-saving strategy revolves around mass job cuts, spending efficiency, and a product overhaul in an attempt to secure its place in a difficult luxury market.
In an effort to save £100 million by fiscal year 2027, Burberry plans to instigate a workforce reduction of approximately 18-20%, affecting 1,700 jobs globally, which equates to a significant reduction in "people-related costs."
The company's cost-saving strategy also includes smart spending on procurement and real estate expenses, hoping to trim these costs by £60 million over the next two years.With these measures, Burberry aims to secure its position in the challenging luxury market.
