Luxury British fashion brand Burberry, famous for its iconic trench coat, is preparing to cut hundreds of jobs under a cost-cutting program due to falling profits. The company has lost over a third of its stock market value since the beginning of the year and risks losing its place on the FTSE 100. The restructuring plans were announced to staff via Zoom in late June, informing affected employees that they face redundancy or need to reapply for their positions.

Burberry has started a 45-day consultation, potentially axing hundreds of jobs mainly at its U.K. offices, with union officials coordinating redundancy settlements. Although the exact number of affected staff members remains unconfirmed, reports suggest up to 400 roles are at risk.

Burberry, which was a luxury fashion leader in the 1990s under the leadership of Rose Marie Bravo and creative director Christopher Bailey, has struggled to define its identity since Bravo’s departure and subsequent changes in leadership. Current CEO Jonathan Akeroyd has cited slowing luxury demand as a reason for the brand’s sales slump, and creative director Daniel Lee’s contemporary direction has faced criticism.

Burberry Announces Major Job Cuts Amid Profit Decline
Burberry’s contemporary fashion initiatives have yet to revive the business.

In May, Burberry reported a 36% drop in full-year operating profits to just under $537 million, with like-for-like sales falling 12% in the final quarter. Annual revenue decreased by 4% to $3.7 billion, and sales in Asia grew by only 3% over the year, hindered by a 17% drop in the fourth quarter. Burberry’s wholesale revenue is expected to drop by about a quarter in the first half as the brand seeks to increase control of distribution.

Burberry’s earlier success led to overexposure of its distinctive check design, and in 2018, the company faced environmental backlash for destroying over $36 million in unsold products to prevent counterfeiting. Since then, Burberry has destroyed more than $115 million worth of products, prompting shareholder dissatisfaction. Despite a brief stock rally following the job cuts announcement, Burberry’s share price has dropped by over half in the past five years and by about a third this year.