British luxury brand Burberry is reportedly considering significant job cuts amid financial struggles.
- The company announced a restructuring plan following a dramatic 34% fall in profits.
- Up to 400 jobs, mainly in the UK, are at risk, requiring employees to reapply for roles.
- Burberry’s market value has declined significantly, risking removal from the FTSE 100.
- Sales in the Asia Pacific region, Burberry’s largest market, have sharply decreased.
British luxury brand Burberry appears to be navigating turbulent financial waters as it considers significant staffing reductions. Following a notable 34% year-on-year decrease in adjusted operating profit to £418 million for the year ending 30 March 2024, the company has laid out restructuring plans that could affect the job security of up to 400 employees, primarily based in its UK offices.
The restructuring initiative reportedly follows a significant fall in Burberry’s stock market valuation, which could lead to its exclusion from the FTSE 100. Amid a broader slowdown in the demand for luxury goods, Burberry’s CEO, Jonathan Akeroyd, acknowledged the difficulties in executing the company’s strategic plans under these conditions. “Executing our plan against a backdrop of slowing luxury demand has been challenging,” admitted Akeroyd.
Sales have been disappointing, particularly in Burberry’s key Asia Pacific market, which experienced a 17% decline in the fourth quarter, exacerbated by a 19% drop in sales in mainland China. This downturn has been a stark contrast to the brand’s previous post-Covid recovery momentum in the region.
In response to the challenging economic environment, CEO Jonathan Akeroyd waived his bonus for the year. Despite the financial setbacks, he emphasised the progress made in refining Burberry’s brand image, evolving its product offerings, and enhancing distribution channels.
Drapers, the publication reporting this, has reached out to Burberry for further comments regarding the reported job cuts but has yet to receive a response.
Burberry faces significant challenges, reflected by potential job cuts and falling sales, requiring strategic adjustments to navigate the luxury market’s current downturn.
