Burberry shares jump on cost savings as 1,700 jobs to go

(Sharecast News) - Shares in Burberry jumped on Wednesday as the troubled luxury brand swung to a full-year loss amid a slump in revenue and warned that 1,700 jobs could be at risk as part of its ongoing turnaround plan. The company posted a £66m pre-tax loss for the year to March 29 compared to a profit of £418m a year ago. Revenue fell 17% to £2.46bn.

Sales fell less than expected in the fourth quarter, down 6% in the three months to March against consensus estimates of 7%. Shares in the company were up almost 15% in London trade.

It also revealed that organisational changes as part of a turnaround plan could see it slash 1,700 jobs globally as part of a broader cost-cutting programme including procurement and real estate which are estimated to lead to cost savings of £60m on top of the £40m already announced by chief executive Joshua Schulman.

"We are still in the early stages of our turnaround. The current macroeconomic environment has become more uncertain in light of geopolitical developments," the company said on Wednesday.

Schulman said most of the 1,700 job cuts would be at the group's head offices around the world, but roles would also go by reorganising staff rotas in stores and dropping one shift at its factory in Castleford.

He said the change in Castleford, which is expected to affect about 150 jobs, came ahead of a "significant investment" in the second half of this year in the factory.

"For a long time we have had over capacity at that facility and that's simply not sustainable at this point. We are making this change to safeguard our UK manufacturing and will be making a significant investment in renovating the factory," he said.

Reporting by Frank Prenesti for Sharecast.com