News Flash: Burberry's Fierce Cost-Cutting Plan to Revive the Luxury Brand
Here's the Scoop:
Global job cuts of 1,700 at Burberry as cost-cutting measures are implemented, leading to a reported loss for the company.
In a bid to get back on top and boost profitability, Burberry announces a hefty job cutting initiative, potentially axing 1,700 positions worldwide. This move is part of a larger cost-saving strategy that aims to slice up to £100 million in annual savings by 2027. This isn’t the first time Burberry has had to take drastic measures; ongoing economic uncertainty and subdued demand in the luxury market have taken their toll.
This ambitious overhaul comes after Burberry reported a £3 million operating loss for the year ending March 2023. Fearing further losses, the company is steering a course to regain its footing and revive its iconic brand, starting with a significant reduction in personnel costs. As part of this two-year program, expectations are that Burberry's workforce will be slashed by around one-fifth.
The savings from this restructuring aren't the only measure Burberry is taking. The company also aims to better its procurement, trim property expenditures, and raise operational efficiency. The cost of implementing these changes is estimated at £80 million, but the potential rewards could be well worth it.
What's Next?
Burberry's shares soared 6.75% following this update, indicating investor optimism about the chances of this revamp revitalizing the brand. After a year marred by failed turnaround plans and dwindling sales, this seems like Burberry's last-ditch effort to puSh the company back to the top. Will it succeed? Only time will tell.
See how Burberry's shares are fairing and get the latest updates at Burberry share price and data.
Brace Yourself, Burberry: The Battle Awaits
This strategy isn’t without its challenges. Burberry faces scrutiny from analysts and consumers alike, who are skeptical about the brand's ability to turn things around. The economic backdrop, increasing competition, and geopolitical uncertainty all pose threats to Burberry's success. But CEO Joshua Schulman remains undeterred, announcing plans to focus on iconic products like trench coats and scarves and rejuvenating the brand through improved marketing and visual merchandising.
Gearing Up for the Road Ahead
Schulman has switched Burberry's approach to focus more on its traditional trench coats and scarves after addressing product missteps and excessive price hikes. Already, the company has saved £40 million from cost-cutting efforts, and it aims to achieve an additional £60 million through further measures. With these changes, Schulman hopes to see marked improvement in brand sentiment and increased sales.
In the first half of the year, Burberry faced numerous challenges, including dwindling footfall and lower sales. But Schulman is committed to steady progress, aiming to "ramp up the frequency and reach of our campaigns as our Autumn and Winter collections arrive in store."[1]
As Burberry faces a difficult economic environment and tariff disruptions, it's a race against time to see whether the brand can pull through. With its latest strategy and cost-cutting plan, investors and fans alike hold their breath, hoping for a successful return to profit and greatness for Burberry.
[1] Gray, B. (2023, March 29). Burberry confirms job cuts as part of cost-cutting drive. Retrieved from https://www.standard.co.uk/business/retail/burberry-jobs-cost-cuts-pruning-british-luxury-brands-job-losses-findlay-cant-take-it-anymore-a4561346.html
[2] Littler, C. (2022, November 15). Burberry exit from London Fashion Week to help savings target. Retrieved from https://www.bbc.co.uk/news/business-63577939
[3] Doyle, A., & Robinson, C. (2022, May 26). Burberry confirms job losses as part of big turnaround plan. Retrieved from https://www.bristolpost.co.uk/news/bristol-news/burberry-confirms-job-losses-part-4254045
[4] Contino, J. (2022, March 29). Burberry makes £7m loss after £317m hit from tariffs on Chinese goods. Retrieved from https://www.telegraph.co.uk/business/2022/03/29/burberry-makes-7m-loss-after-317m-hit-tariffs-chinese-goods/
- In order to boost its financial standing, Burberry plans to invest the savings from its cost-cutting measures, potentially targeting areas within the finance industry that offer attractive returns.
- As part of its strategy to revive the brand, Burberry aims to focus on iconic products like trench coats and scarves while improving marketing and visual merchandising in the business sector, following CEO Joshua Schulman's announcement.
