Burberry's turnaround: Fewer staff, more brand myth – is that enough?

The British luxury fashion group Burberry, with its recent financial results, not only announced a significant reduction in jobs, but also provided insight into the progress of its recovery plan. With the reorientation that started last year, chief executive officer (CEO) Joshua Schulman wants to correct the consequences of a failed high-price strategy and frequent changes in management and design.

At the beginning of the first full financial year under Schulman's leadership, there appear to be initial signs of improvement, even against the backdrop of cooling global demand in the luxury segment and increasing trade policy uncertainties, including potential US import duties.

Job cuts at London headquarters and in traditional factory

The core of the restructuring plan is a return to the brand's roots, accompanied by a substantial cost reduction. It became clear on Wednesday that a further 60 million pounds in savings would be realised within the next two years. In total, Burberry is now anticipating potential total savings of up to 100 million pounds.

As part of the ongoing savings programme, Burberry announced its intention to cut up to 1,700 jobs in the coming financial year. This equates to approximately one fifth of its global workforce. As CEO Jonathan Schulman stated in a conference call with analysts on Wednesday, the cuts mainly concern the company's global headquarters, with the London headquarters taking the lead. Jobs will also be cut through a reorganisation of deployment planning in retail, but store closures are not currently planned. In addition, Burberry aims to achieve savings in the areas of purchasing and real estate.

Another step concerns the traditional factory in Castleford, Yorkshire, where Burberry manufactures its iconic trench coats. Despite the importance of the outerwear category for the brand's future growth, the night shift is being discontinued there. This step follows planned, large-scale investments in the modernisation of the Victorian factory, which will be carried out in the second half of the current financial year.

“There has been structural overcapacity in our factory for quite some time, which is not sustainable in the long run,” said Schulman. “This decision should safeguard our British production in the long term. We will be investing significant resources in renovating the production site later this year.”

Tradition as a recipe for success?

The focus on tradition is in line with the strategic direction under the name Burberry Forward. This not only emphasises quality and origin, but also highlights the British identity of the brand in design, communication and brand management. Tradition is not only important in production, but also increasingly determines the brand's creative self-image. The intense focus on timeless British luxury is of particular importance, as this unique selling point helps to distinguish the brand from the currently dominant French and Italian labels.

In this context, the CEO stressed that the greatest opportunities lie where there is the most authenticity. He is convinced that Burberry has the potential to return to being a powerful luxury brand more than ever. The company has all the necessary prerequisites: a clear original mission, craftsmanship in a central product category and brand codes that enable expansion beyond its core business.

“We are talking here about a company that has achieved annual sales of three billion pounds in the recent past, with a gross margin of 70 percent and an operating margin in the high figures. I am firmly convinced that we can not only reach this level again, but even exceed it,” said the CEO, referring to the successful years under creative director Christopher Bailey and then director Angela Ahrendts.

Moreover, they are drawing on the spirit of the country of origin and expertly combining tradition with innovation in the brand identity. These qualities and the broad, universal appeal to luxury consumers are decisive for future success.

Is the recovery plan already paying off?

Despite the business results, which Schulman himself described as ‘challenging’, the now fourth CEO within 10 years expressed optimism about the company's progress: “Ten months after the start of my term, I could not be more satisfied with the progress our team is making in brand development. We are moving from modern British luxury to timeless British luxury.”

But Schulman does not seem to be alone in believing in the success of his efficiency programme. Since the publication of the annual results and the planned job cuts, the Burberry share price temporarily recorded a double-digit increase on Wednesday, a possible sign of the capital markets' confidence in the house's strategic reorientation.

A confidence that customers of the brand also share, as the autumn/winter 2025 fashion show marked a turning point for Burberry. It was not only positively received by the media and customers, but also led to a revival in trade. After two years of restraint, wholesale partners in the US and Europe increased their order volume again by double digits, according to Schulman.

Preparations for import duties

With an eye on the coming months, the focus is now clearly on reviving brand awareness and further improving margins and cash flow. In addition, the company is convinced that with the cost savings already implemented, it is well prepared for possible economic challenges, for example in the wake of new US import duties.

“Regardless of how the import duty policy ultimately develops, the savings announced today give us the necessary tools to absorb any potential consequences,” said chief financial officer Kate Ferry, who stressed that Burberry is “well positioned” to operate successfully even under changed circumstances.