Shares in Burberry surged more than 15% on Wednesday after the company unveiled plans to cut about 1,700 jobs globally as part of a sweeping cost-reduction initiative, and clocked profits much higher than anticipated.
The move is expected to generate £60 million in savings by the fiscal year beginning April 2027 and signals a more aggressive phase in the British luxury brand’s turnaround strategy under Chief Executive Joshua Schulman.
The job cuts represent close to 20% of Burberry’s 9,336 global employees, based on its most recent annual report.
The announcement came alongside the release of its full-year results, which showed adjusted operating profit of £26 million—well above analysts’ expectations of £4.7 million.
Fourth-quarter comparable-store sales fell 6%, slightly worse than the third quarter’s 4% decline but better than analysts’ forecast of a 7% drop.
“Changes difficult but necessary”: CEO; layoffs would target office-based roles
CFO Kate Ferry said during an earnings call that the reductions would mainly target office-based roles across international locations, although retail staffing will also be adjusted to better match peak customer traffic patterns.
In the UK, Burberry will remove the night shift at its Castleford trench coat factory, though the company insists it will maintain its commitment to British manufacturing.
“These changes are difficult but necessary,” Schulman said, stressing that the focus remains on long-term brand elevation and profitability.
“We will continue to manufacture our iconic trench coats in the UK and invest in our craftsmanship and heritage.”
Since assuming the CEO role in 2023, Schulman has been tasked with restoring Burberry’s appeal among aspirational luxury buyers, many of whom have pulled back spending due to inflation and economic uncertainty.
The group’s sales performance has been volatile, with declining demand in China and concerns about a slowdown in the broader luxury goods sector.
Nevertheless, it seems Schulman’s efforts have begun to show early results.
The brand’s key outerwear and scarf categories are said to be gaining traction, aided by more focused marketing and product positioning.
Analysts call for patience despite early gains, Asian market still a key concern
“Burberry seems to be pursuing the right strategy to reset the business, which in time should support a return to positive revenue and profit growth,” RBC Capital Markets analysts Piral Dadhania and Richard Chamberlain say in a research note.
We view these results as an encouraging first step.
While market response to the announcement has been overwhelmingly positive, analysts are also tempering expectations, warning that macroeconomic risks and geopolitical tensions could weigh on the pace of recovery.
Market consensus of the shares as a hold also indicates some investor reticence to jump on board the turnaround story just yet, analysts say.
Interactive Investor’s Richard Hunter noted that while Burberry’s restructuring and brand refocus are beginning to resonate, external challenges remain.
“Burberry’s new strategy, which is being rolled out after a difficult last year, will take time to filter through,” he said.
“For all its instant progress, much remains to be done and some of the overhang will be outside the British brand’s control. Its key Asian market is a concern as President Donald Trump’s tariffs might hurt consumer sentiment further as the economic outlook is uncertain,: he said.
Citi analyst Thomas Chauvet added that the group’s strategic plan is “robust” and should unlock medium-term value, though he cautioned that execution risks and global market headwinds persist.
Citi expects earnings before interest and taxes (EBIT) for fiscal 2026 to remain around £134 million, a modest recovery that reflects operational changes and further streamlining.
Whilst patience is needed, potential rewards now outweigh the risks.
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