Burberry to Cut 18% of Global Workforce Amid Ongoing Business Decline

British luxury fashion brand Burberry has announced plans to cut nearly one-fifth of its global workforce by 2027, as part of a broader effort to reduce costs and steer the company back to profitability.

The company disclosed the move on Wednesday, revealing that approximately 1,700 jobs are at risk. The announcement accompanied its financial results for the year ending March 29, which showed a £3 million ($4 million) loss and a significant drop in revenue.

The job reductions are part of a wider restructuring aimed at improving efficiency and boosting long-term profitability. Burberry said it is targeting £100 million ($133 million) in annual savings by 2027 through various cost-cutting measures.

Despite the weak financials, Burberry’s stock rose by more than 9% on Wednesday morning, as investors reacted to the company’s renewed focus on operational overhaul and cost discipline.

The 169-year-old fashion house has been struggling with a decline in global luxury spending, a trend that has affected several high-end brands. Burberry shares have plummeted 66% since peaking in April 2023.

In its earnings report, Burberry acknowledged that global economic uncertainty – exacerbated by geopolitical tensions – has made the business environment more challenging. Although not explicitly mentioned, the reference is seen as a nod to the lingering impact of global trade disruptions.

CEO Joshua Schulman, who joined the company last year to spearhead its turnaround, admitted the brand is still in the early stages of recovery. He noted that Burberry is “operating against a difficult macroeconomic backdrop” but reaffirmed the company’s commitment to rebuilding.

Part of the company’s revival strategy includes returning to its roots by focusing on iconic items like trench coats and scarves, while also adjusting prices for accessories such as bags and footwear to appeal to a broader customer base.

Market analyst Susannah Streeter of Hargreaves Lansdown commented that Burberry faces particular challenges in the mid-tier luxury market, where it lacks the brand power of ultra-luxury competitors. She added that aspirational consumers are increasingly cautious with spending, making Burberry’s path to recovery more complex.