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Burberry has launched a major cost cutting drive putting up 1,700 jobs at risk after it slumped into the red following a hefty fall in sales.
Britain’s biggest luxury fashion brand made a pre-tax loss of £66 million for the 12 months to 29 March compared with a £383 million profit in the previous year. Revenue for the year was down 17% from £2.97 billion to £2.46 billion.
CEO Joshua Schulman unveiled plans for a further £60 million of cost cutting on top of £40 million already announced, making £100 million savings in total over the next two years. The savings will cost around £80 million to implement.
The company, which has its flagship store on Regent Street, said the “reduction in people-related cost...could impact around 1,700 roles globally over the life of the programme, subject to consultation where applicable.”
Burberry, famed for its signature check, said it had suffered a “challenging first half” and warned of a “difficult macroeconomic backdrop.”
However Schulman insisted that a major strategy rethink launched in November with a new emphasis on traditional British outdoor wear boosted sales in the second half and will deliver “sustainable profitable growth over time."
Retail comparable sales were down 12% at £2.08 billion while wholesale revenue took a much bigger hit, falling 37% to £319 million.
The fall in sales was slower in the second half of the year but Burberry cautioned: “The current macroeconomic environment has become more uncertain in light of geopolitical developments.”
Schulman said: “After a challenging first half, we have moved at pace to implement Burberry Forward, our strategic plan to reignite brand desire, improve our performance and drive long-term value creation.
“Our customers are responding to our Timeless British Luxury brand expression. With improvement in brand sentiment, we will be ramping up the frequency and reach of our campaigns as our Autumn and Winter collections arrive in store.
“The continued resilience of our outerwear and scarf categories reaffirms my belief that we have the most opportunity where we have the most authenticity. 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.”