Embattled Burberry to cut 1,700 jobs amid turnaround
Burberry unveiled a sweeping cost-cutting plan Wednesday that includes eliminating approximately 1,700 jobs globally, representing about 20% of its total workforce. The move is the latest and most drastic phase of CEO Joshua Schulman's turnaround strategy, aiming to deliver £60 million in savings on top of £40 million announced last November, for a total of £100 million in planned efficiencies by 2027.
The restructuring, which will impact office roles, store staff, and workers at its Castleford factory in England, comes as the British luxury house reported a full-year sales decline of 12%. While this was slightly better than analysts feared, it underscores the persistent challenges facing the brand. Investors responded positively to the aggressive cost discipline, sending Burberry's shares up 17%.
A Turnaround Facing Macroeconomic Headwinds
The job cuts are part of a broader effort to "course correct" after years of underperformance and management churn. Schulman, who joined Burberry in July, expressed cautious optimism, stating he is "more optimistic than ever that Burberry’s best days are ahead." However, the path is complicated by a deteriorating macroeconomic environment. Sales fell across all regions, with a notable swing to negative growth in the previously resilient Americas market in the fourth quarter.
The company also highlighted increased geopolitical tension and "incremental unmitigated tariff risks" as key downside threats, though CFO Kate Ferry noted the U.S. represents 19% of business and the company is "well diversified" to respond. Burberry did not provide specific guidance on potential tariff impacts, calling the situation "very dynamic."
Strategic Focus and Analyst Skepticism
At the core of Schulman's plan is a refocusing on Burberry's heritage staples, like the iconic trench coat, under Creative Director Daniel Lee. However, analysts question both the pace of the turnaround and the commercial limitations of this product strategy. "Burberry’s signature trench coat, while an undisputed icon, poses a business challenge. As a lifetime product, it naturally limits the frequency of repeat purchases," noted Yanmei Tang of Third Bridge.
Jefferies analysts described the turnaround as in "slow-burn mode," suggesting it could be some time before the strategy bears significant fruit. The aggressive restructuring indicates Schulman is prioritizing financial stability and operational leanness to buy time and create a runway for his creative and brand revitalization efforts, betting that deep cost cuts now will enable sustainable profitable growth later.
