Burberry Announces 1,700 Layoffs, Exceeds Profit Expectations

Burberry, the renowned British luxury brand, has announced a significant restructuring plan that includes the layoff of 1,700 employees globally. This move is part of the company's broader strategy to reduce costs and undergo a business transformation. The announcement comes alongside the revelation that Burberry's adjusted operating profit for the fiscal year ending March 29 exceeded expectations.

Under the leadership of CEO Joshua Schulman, who took over last year, Burberry has been working to address challenges stemming from misguided product strategies, excessive pricing, and a sluggish overall luxury market. Schulman has refocused the brand's strategy and marketing efforts, placing a greater emphasis on iconic products such as trench coats and scarves. The adjusted operating profit for the fiscal year 2025 was 26 million pounds (34.55 million USD), narrowly avoiding a loss and surpassing analysts' expectations of 11 million pounds.

Despite a 6% decline in comparable sales for the fourth quarter, which was better than the average analyst prediction of a 7% drop, Schulman attributed this to the brand's improved sentiment and the upcoming launch of the autumn-winter collection. The company plans to increase the frequency and impact of its marketing activities to support this launch.

Regionally, sales in the Americas, Europe, the Middle East, India, and Africa decreased by 4% compared to the previous year, while the Asia-Pacific region saw a 9% decline. The uncertain outlook for consumer spending in the U.S. poses a challenge to Schulman's strategy of focusing on American consumers to boost Burberry's sales. The company's statement did not provide specific details on U.S. tariffs but acknowledged that geopolitical developments have increased economic uncertainty. Burberry did not set specific targets for the fiscal year 2026.

This restructuring plan is a critical step in Burberry's efforts to streamline operations and adapt to the changing market landscape. By reducing its workforce and refocusing its product offerings, the company aims to enhance its financial performance and maintain its position as a leading luxury brand. The layoffs are expected to have a significant impact on the company's cost structure, allowing it to invest more in marketing and product development.

Schulman's leadership has been pivotal in navigating Burberry through a challenging period. His strategic adjustments have helped the company avoid a potential financial crisis and set the stage for future growth. The focus on iconic products and increased marketing efforts are part of a broader strategy to rejuvenate the brand and attract new customers. The company's ability to exceed profit expectations despite a decline in sales is a testament to its resilience and adaptability.

However, the uncertain economic outlook and geopolitical developments pose ongoing challenges for Burberry. The company's decision not to set specific targets for the fiscal year 2026 reflects its cautious approach to the future. As it continues to implement its restructuring plan, Burberry will need to remain agile and responsive to changing market conditions to ensure its long-term success.