Luxury brand Burberry, famous for its Yorkshire-made trench coats, has moved into consultation with employees over job cuts, but said it was too early to say how many staff will be axed or where the cuts will fall.
The news came as Burberry reported a thee per cent drop in like-for-like sales in what it described as a challenging first quarter.
The group hopes to make cost savings of £100m by overhauling its operations as it struggles to cope with a reduction in the number of Chinese tourists visiting its stores in Europe and weak demand in Hong Kong.
It is unlikely that the skilled workers who stitch 5,000 heritage trench coats a week at Burberry’s factory in Castleford will be affected as their jobs are vital to Burberry’s success.
Burberry’s shares rose to 12 week highs after the group announced on Monday that Halifax-born creative director Christopher Bailey will step down as CEO next year to focus on being creative director.
Marco Gobbetti, the Italian boss of LVMH brand Celine, will replace Mr Bailey some time next year. Mr Bailey will be moved to the role of president and retain his title of chief creative officer.
Mr Bailey has seen his pay plummet 75 per cent from £7.5m to £1.9m after he lost out on a bonus due to Burberry missing its profit targets.
Their stitching skills take a year to hone and Burberry is hoping to persuade its 800 workers in Castleford and Keighley, where the gabardine fabric is woven, to move to a new state-of-the-art manufacturing and weaving facility in Leeds.
Burberry is spending over £50m on the new facility, situated on the South Bank of Leeds, which will employ more than 1,000 people when it is completed in 2019.
Instead the job cuts are likely to hit the group’s head office or in stores.