Burberry boss Christopher Bailey said he “fundamentally” believes the business will outperform the luxury market in the coming years following a change of strategy that will see costs reduced by £100m.
The business is reacting to a slowdown in the Chinese and US markets which led to a 10% drop in underlying profit for the year ended March 31.
Burberry is simplifying its internal team structure to “reduce duplication” resulting in an unspecified number of job losses.
It is also cutting the number of products in collections by between 15% and 20% and store merchandising will now be led by a central team to ensure a clear brand message.
Bailey said: “On product we need to focus, simplify our offer, reduce our range and add excitement. In retail we need our space to be more productive and we need to further enhance our leading position in digital. It has become clear we must align our processes and cost base to unlock all of these things as that will under pin our ability to deliver.”
The brand is cutting down the number of pieces in its ranges to “reduce complexity” and give greater focus to the core pieces in the collection. While the pricing architecture will remain the same Bailey said there was an opportunity to do more at both the upper and lower end of its range.
“At the top end there is a lot of demand on the most luxurious of our products, like cashmere scarves and trenches, and at our entry level we see an opportunity to inject more excitement to convert those millennial, digital followers.”
Outerwear and handbags will play a key role going forward, according to the chief creative and chief executive officer.
The business has changed its product team structure so one team will be responsible for each category end-to-end, rather than having different teams working on design, sourcing etc, to improve “consistency and responsiveness”.
In store merchandising will also have a more centralised approach, where all stores around the world will feature the same key trend pieces, core staples and a smaller section of local product to suit the climate or culture.
“In the past we have shown our ability to adapt, we are ready to do so again,” said Bailey. “We have significant growth potential but we need to shift our mind-set and our ways of working to drive simplicity and reduce costs.”
Bailey said he would not comment on “speculation” that the business is hiring someone at executive level to support him in his dual role, but agreed the firm needed to “beef up” skills in certain areas.
He added that the three year plan is an opportunity to “strengthen the business”: “We are more focused on our goals and delivering them. The change is an opportunity to strengthen the business while maintaining that magic of Burberry, our long history and pioneering spirit. Our plans are stretching but achievable.”