Burberry is cutting approximately 1,700 jobs worldwide, about 18% of its global workforce, in an effort to reduce staff costs and return to profitability.
This move comes as the luxury fashion brand faces challenges, including a decline in sales and waning appeal among younger consumers.
The retailer said it was upping its cost-cutting target to £100million of savings per year by the 2027 financial year.
These savings will partly come from a reduction in ‘people-related costs’, the firm said, which could affect around 1,700 jobs globally over the two-year programme.
The latest cost-cutting drive would reduce the Burberry workforce by nearly one-fifth.
The company said the ‘organisational changes’ were aimed at ensuring Burberry was ‘fit for the future’.
Burberry shares jumped 6.75 per cent or 55.80p to 882.60p following the update. In the last year, the retailer’s shares have fallen by around a quarter.
‘Investors have seen several failed turnaround plans from Burberry in recent years. This one feels like a last chance saloon’, Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club, said.
On Wednesday, CEO Joshua Schulman unveiled plans for a further £60million of cost-cutting on top of £40million already announced, making £100million savings in total over the next two years. The savings will cost approximately £80million to implement.
Burberry reported a 17 percent drop in revenue to £2.5billion for the year to 19 March.
It made an operating loss of £3million against a £418million profit the previous year.
The group made a pre-tax loss of £66 million for the 12 months to 29 March, compared with a £383million profit in the previous year.
Fourth-quarter comparable sales were down 6 per cent, better than the analysts’ average forecast for a 7 per cent decline.
The group said it had endured a ‘challenging first half’ and warned of a ‘difficult macroeconomic backdrop.’
But, Schulman said in a statement: ‘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.’
