‘Burberry faces an identity problem’, warns luxury expert amid brand's 1,700 job cuts in bid to slash costs

14 May 2025, 15:34 | Updated: 15 May 2025, 06:48

Burberry has announced plans to cut a potential 1,700 jobs worldwide as part of efforts to slash staff costs and return the luxury fashion brand to a profit.

The proposals will cut about 20% of its global workforce, including job losses at its Castleford factory in West Yorkshire.

The company said it is hiking its cost-cutting target to £100 million 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.

What do the cuts mean for Burberry?

Luxury brand management expert Dr. Kelly Meng, of Goldsmiths, University of London, warned that the news may leave the global fashion brand “fac[ing] an identity question”.

She said: “Burberry was once a leader in digital innovation and synonymous with British heritage.

“But today, the brand faces an identity question: what does Burberry stand for now? If cost-cutting is necessary, then the next step must be strategic reinvestment—not just into retail footprint or short-term fixes, but into creativity.”

Dr. Meng adds that this will mean “supporting emerging talent, collaborating meaningfully across the wider creative sector, and repositioning Burberry as a cultural leader, not just a commercial one”.

Burberry’s chief executive Joshua Schulman said the majority of the reductions will come from its head office-based teams around the world.

These would “naturally” be focused in the UK, where there is a bigger proportion of employees.

Dr. Meng warned that it’s important to view Burberry’s announcement within the broader rhythm of luxury business cycles.

“All companies, including those in luxury, undergo strategic resets, particularly in times of sustained profit pressure.”

This news for Burberry isn’t “entirely unexpected”, she adds.

In shops, plans to “align schedules with peak store traffic” will result in the reduction of some staff.

Mr Schulman also confirmed the company has proposed scrapping the night shift at its Castleford factory, which makes Burberry’s trench coats which sell from about £1,000 to £10,000 apiece.

The proposals will result in the reduction of about 25% of the company’s UK roles.

“For a long time we have had overcapacity at that facility, and that is simply not sustainable,” Mr Schulman said.

“But I want to be very clear that we are making this change to safeguard our UK manufacturing, and in fact we will be making a significant investment to renovate this factory in the second half.

“Our intention is that we make our British heritage raincoats in the UK for many generations for come.”

The British brand revealed it had tipped into an operating loss of £3 million in the year to March 29, swinging from a profit of £418 million the previous year.

However, profits on an adjusted basis, which strips out what Burberry views as one-off costs, came in at £26 million – higher than the £11 million some analysts had been expecting.

Retail comparable store sales fell 12% year-on-year, with a 16% slump in sales across Asia dragging on the total.

Burberry said business in the UK is being “seriously impacted by the withdrawal of VAT refunds for overseas visitors in 2021, which has made the UK the least competitive destination in Europe for tourist shopping”.

But more spending from local customers partially offset a decline in tourist spending over recent months.

Mr Schulman told investors: “While we are operating against a difficult macroeconomic backdrop and are still in the early stages of our turnaround, I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time.”

The fashion firm has been struggling against a slump in demand among shoppers in China, one of its biggest markets, which has been dragging heavily on sales.

It launched a £40 million cost-cutting programme in November after first sinking into a loss.

On Wednesday, Burberry said it wants to make an additional £60 million of savings by the 2027 financial year, which would bring the target to a combined £100 million.

The brand said sales had improved over the second half of the latest year, compared with the first half, which gives it “confidence” its strategic plan is starting to pay off.

Demand for its popular staple styles including trench coats and scarves meant the retailer’s outerwear category continued to perform better than other products.

Mr Schulman said Burberry will be “ramping up the frequency and reach” of its marketing campaigns.

It follows the brand enlisting the likes of actors Olivia Colman and Barry Keoghan for new celebrity campaigns over the past year.

Do the cuts signal wider trouble for UK luxury fashion?

Luxury brand expert Paurav Shukla, of the University of Southampton, says Burberry's recent job cuts are “symptomatic of wider pressures on the UK luxury fashion sector” but warns the company also faces distinct challenges.

The luxury sector is slowing down, with forecasts showing global growth could shrink this year for the first time since 2016.

Professor Shukla says: “This cooling is largely attributed to persistent global inflation, ongoing geopolitical uncertainties, and, crucially, a softer demand from Chinese consumers, a demographic that has been a primary growth engine for luxury brands”.

Meanwhile, he explains that Burberry's situation “isn't solely a reflection of these market-wide trends”.

“Our research indicates that Burberry has experienced a period of 'see-sawing' in its communications and brand strategy, moving away from its strong heritage in pursuit of a modern aesthetic that didn't fully resonate with its established customer base or sufficiently attract new loyalists.

“This inconsistency can erode those vital value perceptions.“

How might these cuts impact Burberry’s competitiveness?

Burberry’s recent job cuts may be part of CEO Joshua Schulman’s 'Burberry Forward' strategy, which aims to revive the brand by doubling down on its British heritage and core products such as outerwear and scarves.

Professor Shukla adds that while the cuts may risk damaging brand perception, employee morale, and product quality, they could also create a leaner, more agile organisation better aligned with Burberry’s luxury positioning.

“The ultimate impact on the brand and its competitiveness hinges on whether these austerity measures genuinely enable the 'Burberry Forward' vision to take hold.

“The key will be to balance cost-cutting with strategic investment and to maintain the consumer value perceptions, quality, innovation, and customer experience expected of a luxury brand throughout this transition.

“If they manage this, the brand could emerge stronger and more competitive. If mishandled, the cuts could exacerbate existing challenges.”