Burberry prepares to axe hundreds of jobs as profits shrink

Employees were first informed of the restructuring during a Zoom meeting in late June, with affected workers told they were either facing redundancy or having to reapply for their roles. The company has begun a 45-day consultation, signalling that hundreds of roles could be cut.

It is understood that union officials are coordinating redundancy settlements with a select group of employees. The company refused to say how many workers will be affected, but employees fear up to 400 jobs could be at risk.

One employee described the process as “brutal”. It employs 9,169 people across the world, including in the UK where it has a presence in both Leeds and London.

The cuts are expected to mainly affect the company’s UK offices.

The latest round of redundancies comes after a proposal to cut 500 jobs in 2020 when the business sought to save £55m amid pressures from the pandemic. 

Burberry’s inability to halt its share price decline has already raised fears that it could soon become a takeover target. 

Luca Solca, a luxury goods analyst at Bernstein, said the job cuts were the results of long-standing struggles at Burberry: “Organic growth is not forthcoming. Burberry has been underperforming for years. 

“One can only think that the Burberry reinvention has yet to succeed.”

Mr Solca said that Burberry’s depressed valuation could attract suitors from private equity or US rivals.

A “buyer could undertake the grisly but arguably necessary measures to stabilise the Burberry brand away from the prying eyes of the public markets”, he said. 

Burberry’s poor performance prompted Jonathan Akeroyd, the chief executive, to forgo his annual bonus of up to £2.3m in May, as the company said it would not have been appropriate for him to receive the payment. 

Mr Akeroyd has been attempting to oversee a turnaround at the business since he was appointed from Versace in 2022. He received an up-front payment of £6m to make the switch from the Italian brand.

However, Burberry profits fell 36pc last year to £418m. This came alongside a 4pc drop in sales to £2.97bn. 

Mr Akeroyd has acknowledged that the company has fallen short, although he has also sought to blame the impact of the Government’s tourist tax.

Burberry’s share price has fallen by 57pc over the past 12 months, falling to its lowest ebb in 15 years. Investor Nick Train has described the plunge as “mortifying”, with the company now worth £3.19bn. 

Analysts have also pointed to how Burberry’s debt pile rose from £460m to £1.1bn over the past year, raising the prospect of inflated borrowing costs.