The British luxury brand Burberry slipped deep into the red numbers in the past financial year, which ended at the end of March. The company, which has been suffering from the continued weakness of the luxury goods industry for months, announced further austerity measures on Wednesday that could affect up to 1,700 jobs.
For the financial year, Burberry reported a net loss of £ 75 million (the equivalent of around 89 million euros). In the previous year, the company had made a profit of £ 270 million. Despite the disappointing figures, the group emphasized that the first positive effects of his renovation plan that started last year were visible.
As part of a “emergency” new orientation announced in November, Burberry focuses on its iconic classics, especially the trench coat. This strategy had already led to a “significant improvement in retail sales”, the company said.
At the same time, however, Burberry warned that the relaxation is still at the very beginning and the macroeconomic environment is further stressed by geopolitical uncertainties.
The traditional brand, an icon of the British luxury industry, has been fighting for some time with a weak demand for high-end products, especially in China, and with the consequences of strategic wrong decisions in recent years. The company’s stock market value has dropped drastically – last September Burberry had to leave the FTSE 100, the leading index of the London Stock Exchange.
18 percent of the jobs in danger
The luxury goods industry had put the US market in recent months to cushion the declining sales in China. But now the industry, including Burberry, is faced with additional challenges: the new import tariffs announced by Donald Trump.
Against this background, Burberry announced further austerity measures in the amount of £ 60 million (around 71 million euros) on Wednesday. This sum is added to the savings of £ 40 million already announced last year.
Specifically, the company announced that these measures could “have an impact on around 1,700 jobs worldwide over the course of the program time”. This corresponds to more than 18 percent of the approximately 9,300 employees, as can be seen from the current annual report.
“After a difficult first half of the year, we made progress in implementing our strategic plan,” assured Chief Executive Officer (CEO) Schulman in the press release. “The resilience of our categories outer clothing and scarves confirms my conviction that we have the greatest chances where we have the greatest authenticity,” he added.
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