Burberry is reportedly set to cut 400 jobs as part of a cost-saving plan to offset declining profits. The layoffs are expected to mainly affect the company’s British offices. There are fears that Burberry is just the first brand to make such a decision and that the luxury cuts could come to Italy as well.
400 jobs
According to the Telegraph, employees were first informed through a video call in late June. Burberry’s top management has begun a consultation with unions that will last a maximum of 45 days. The British brand, which employs more than 9,100 people worldwide, declined to specify how many workers will be affected. But employees fear that up to 400 jobs could be at risk, especially in British offices.
The problem: the accounts
Burberry stock has lost 36% in value since the beginning of the year and 56% from the same period of the previous year. The devaluation makes the brand a target for potential acquisitions. “Organic growth is not imminent, as Burberry has underperformed for years”, Luca Solca, an analyst at Bernstein, tells The Telegraph. “One can only assume that Burberry’s reinvention has not yet been successful. A buyer could take the terrible, but probably necessary step to stabilize the brand away from the prying eyes of public markets”. Analysts pointed out that Burberry’s debt has grown from 460 million to 1.1 billion pounds in the past year.
A new CEO
Rumors have surfaced as early as March that Gerry Murphy, Burberry’s chairman, is looking for a possible replacement for CEO Jonathan Akeroyd and has already met with potential successors. A spokesperson has denied the rumors, but insiders retort that Murphy may be casting even privately.
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