Burberry eyes mass job cuts as China profit slumps

What happened: Burberry has reportedly launched a 45-day consultation that is likely to result in significant job cuts, predominantly impacting the brand's UK offices. Numerous media have reported that an internal memo suggests up to 400 positions could be eliminated, and the luxury brand is reportedly working with union officials to negotiate redundancy packages. The move is part of a sweeping turnaround strategy and comes as Burberry grapples with a steep decline in its stock market value. Though unconfirmed, the level of potential redundancies has sparked concern. The restructuring effort follows a challenging year marked by a dramatic dip in pre-tax profits from 634 million British pounds ($814 million) to 383 million British pounds ($492 million). Burberry's struggles have been in part caused by exogenous factors, like the luxury market's slowdown, leading to underperformance and a shake-up at the top. The Jing Take: Given the scale of the challenges facing Burberry, there is unlikely to be a quick fix. The British luxury brand reported a 4% YoY revenue drop for the fiscal year ending March 30, 2024, with adjusted operating profit plummeting 25%. The brand's CEO Jonathan Akeroyd has noted the difficulties posed by slowing luxury demand, particularly in China, where Q4 sales dropped sharply. One of the only instances when Burberry has gone viral over the past year was for the #Burberrywontgetapennyfromme (巴宝莉赚不到我一分钱), for its extortionately priced hot water bottle, which racked up over 43 million reads on Weibo in November 2023. That was followed by a Lunar New Year campaign that failed to resonate in China, despite it being a first for the brand. Weibo users called the expressions of the featured models “creepy,” and the campaign sparked the creation of related horror movie memes. Chinese actress and national treasure Tang Wei was named one of the luxury house’s global brand ambassadors in Q4 of 2023 – the star’s Weibo hashtag #TangWei (汤唯) has over 2 billion reads. The house urgently needs to amp up its efforts to connect with the market to reverse its fortunes. Amid these struggles, redundancies come as no surprise. Still, though painful, the turnaround process may produce a more agile and efficient maison that can better navigate the market’s twists and turns. The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.

Burberry eyes mass job cuts as China profit slumps

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Published July 11, 2024

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Burberry eyes mass job cuts as China profit slumps