London: British luxury fashion brand Burberry said on Wednesday that it could lose almost a fifth of its world labor over two years to reduce costs because it has fallen into annual net loss.
The group in difficulty undergoes a recovery plan to help increase sales and reduce costs, because the global luxury sector is struggling with low demand from consumers, especially China. Burberry’s net loss was 75 million GBP ($ 100 million) during the 12 months at the end of March, compared to a profit of 270 million pounds Sterling a year earlier, Burberry said in a statement.
Revenues slipped 17% to 2.46 billion pounds sterling. Cost reduction measures were announced on Wednesday, targeting additional savings of 60 million GBP by 2027, which would affect around 18% of his workforce, or 1,700 people.
“While we operate in a difficult macroeconomic backdrop and we are still in the early stages of our turnaround, I am more optimistic than ever than the best days of Burberry are to come,” said Managing Director Joshua Schulman.
Schulman, who in July replaced Jonathan Akeroyd as CEO, has promised to win back customers with a renewed accent on outdoor clothes, including his famous trench.
However, the group has warned that the economic environment has become “more uncertain in the light of geopolitical developments”, as the fallout from American prices threaten to mitigate consumer confidence.
‘Building Momentum’
The new costs of cost reduction plans and a fourth quarter better than expected sent Burberry actions on more than 8% of the morning agreements on the FTSE 250 index in London.
Burberry left the London FTSE 100 FTSE 100 index in September after 15 years, analysts citing strategic errors and a low China request. “Without a doubt, there is a certain building,” said Richard Hunter, market manager at Investor Investor.
“Burberry will want to be devoted to the past year in history books as soon as possible … But the new strategy will take time to filter,” he added.
“The refreshing fashion strategy … helps stem the decline, but patience is thinning,” said Susannah Streeter, responsible for money and markets at Hargreaves Lansdown.burberry “does not have the same attraction of his ultra-luxury rivals, and the aspirant buyers are more prudent, without the deep richness pockets to keep them insulated”, she added.
The Asia-Pacific region has seen the largest drop in Burberry in sales of comparable stores during the year reported, turnover in continental China down 15%.
China is the largest spending in the world in the luxury sector, representing half of the world’s sales, but as the country’s post-paid-country recovery, consumption has reported, sending ribs around the world.
