May 14 (UPI) -- British luxury clothing company Burberry said Wednesday it will cut 1,700 jobs as it continues struggling to stabilize revenue while cutting operating expenses.
"We expect these proposed incremental savings to come from operating expenses, with increased efficiency of spend in procurement and real estate, and a reduction in people-related costs which could impact around 1,700 roles globally over the life of the program, subject to consultation where applicable," Burberry said in a statement.
Burberry announced organizational changes as it reported financial results.
Sales were down 6% in the fiscal fourth quarter January-March. Fiscal year sales were 12% lower.
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"After a challenging first half, we have moved at pace to implement Burberry Forward, our strategic plan to reignite brand desire, improve our performance and drive long-term value creation. Our customers are responding to our Timeless British Luxury brand expression," Burberry CEO Joshua Schulman said in a statement.
The company said the organizational changes are "aimed at enhancing collaboration across our business, increasing our agility, driving efficiency and profitability while protecting our investment in consumer-facing areas."
The company said it expects $79.9 million of savings by fiscal year 2027.
In addition to the jobs reduction, Burberry will cut other costs, including procurement and real estate.
Combined with earlier cost reductions announced in November, total cost savings will be $133.2 million.
According to Schulman, most of the job cuts will be in head office teams around the world, but focused in Britain where most employees are based.
He said night shifts will end at Burberry's Castleford factory, but the reorganization seeks to "safeguard our U.K. manufacturing, and in fact we will be making a significant investment to renovate this factory in the second half."
Burberry is also dealing with the impact of U.S. tariffs.
"We are a well diversified business. The U.S. is really important but it is 19% of our business. Wherever tariffs end up, we'll be able to respond," Chief Financial Officer Kate Ferry said during an earnings call Wednesday.
While we are operating against a difficult macroeconomic backdrop and are still in the early stages of our turnaround, I am more optimistic than ever that Burberry's best days are ahead and that we will deliver sustainable profitable growth over time," Schulman said.
