Burberry’s share price has soared, despite collapsing profits and around 1,700 jobs potentially set to be cut, as markets assess the turnaround plan’s effectiveness
Shares in Burberry (LON:BRBY) have surged despite adjusted losses of 14.8p per share in the year to 29 March.
Burberry is far from one of the world’s most popular stocks right now. Expectations were low going into its FY 2025 results, given the torrid year that Burberry has endured.
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However, a positive Q4 and signs that the FTSE 250 company’s turnaround plan is achieving results saw the share price gain as investor sentiment improves.
“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,” said Burberry CEO Joshua Schulman.
The plan appears to have had an immediate and visible impact, with Q4 performance exceeding general expectations.
“The improved performance over the most recent part of the year dragged the group into positive territory on adjusted operating profit basis, with the first half loss of £41 million being followed by a £67 million second-half profit,” says Richard Hunter, head of markets at Interactive Investor.
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Burberry's annual results - summary
Header Cell - Column 0
52 weeks ended 29 March 2025
52 weeks ended 30 March 2024
Revenue (£ million)
2,461
2,968
Adjusted operating profit (£ million)
26
418
Adjusted earnings per share (EPS) (pence)
-14.8
73.9
Reported operating loss (£ million)
-3
418
Reported earnings per share (EPS) (pence)
-20.9
73.9
Despite this, Burberry’s share price is still down 22% over the past 12 months, and 63% over the past two years.
“It's been a tough year so far for Burberry shareholders, with shares having almost halved from their February peak,” says Adam Vettese, market analyst at eToro. “However, this morning's update may indicate that the turnaround plan is beginning to bear fruit. Burberry’s Q4 comparable retail sales declined by 6%, outperforming analyst estimates of a 7.78% drop.”
One of the most eye-catching elements of the release was the news that further cost-cutting measures from Burberry could see 1,700 jobs – around a fifth of Burberry’s global staff – cut between now and 2027.
Burberry’s job cuts lift share price
Investors seem to be encouraged by the cost-cutting plan announced today, with the share price gain likely caused as much by the prospect of £60 million in annualised savings by 2027 as part of organisational changes announced in preliminary results.
“This should support margins, even if sales remain weak and will be vital in keeping investors on side,” said Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club.
The 1,700 jobs affected will mostly be in global head offices, including London, according to CEO Joshua Schulman. However, around 150 jobs will also be lost as a result of dropping the night shift at Burberry’s factory in Castleford, Yorkshire.
“For a long time we have had overcapacity at that facility and that’s simply not sustainable at this point,” said Schulman.
“The aim is to slim down and take on a leaner silhouette to cope with the uncertainty ahead,” says Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Asian tariffs spark luxury decline
Huggins has called FY25 “an annus horribilis" for Burberry.
“Almost everything that could go wrong did. Luxury consumers across the globe significantly tightened their belts hitting the whole luxury sector," he said.
“Burberry is dealing with difficult conditions in the mid-market luxury sector,” says Streeter. “It doesn’t have the same pull of its ultra-luxe rivals, and aspirational shoppers are more cautious, without the deep pockets of wealth to keep them insulated.”
There is also a threat to luxury brands like Burberry from the impact of Donald Trump’s tariff approach. Despite US-China trade being boosted by a recent pause in the highest reciprocal tariffs, relations between the two superpowers remain frosty, and unless a comprehensive trade deal can be reached there are fears that China’s economy could suffer.
That matters to Burberry because China is a key driver of the global luxury market. Around 22% of Burberry’s revenue is derived from the country, but sales to mainland China declined by 15% over the last year, and 8% during Q4.
These challenges are shared with companies across the luxury sector, though Burberry is suffering particularly heavily."
There are undoubtedly shared challenges across the sector, including slowing demand in China and broader macroeconomic pressures," says Vettese.
"Apparel-focused companies such as Burberry and Kering are struggling more than jewellery-focused peers like Richemont, which reported record sales.
However, Burberry’s wholesale difficulties, stemming from its aggressive distribution control, are less evident among its competitors," he added.
Burberry’s challenges are not confined to China. Sales fell 16% across the Asia Pacific region, with revenues down by 18% in South Korea. South Asia Pacific sales fell 28% during the year.
“Overall, the group is far from being out of the woods, but the immediate impact of ‘Burberry Forward’ is a highly encouraging sign,” says Hunter.
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Dan is a financial journalist who, prior to joining MoneyWeek, spent five years writing for OPTO, an investment magazine focused on growth and technology stocks, ETFs and thematic investing.
Before becoming a writer, Dan spent six years working in talent acquisition in the tech sector, including for credit scoring start-up ClearScore where he first developed an interest in personal finance.
Dan studied Social Anthropology and Management at Sidney Sussex College and the Judge Business School, Cambridge University. Outside finance, he also enjoys travel writing, and has edited two published travel books.
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