👉 Background: Burberry is the British luxury fashion house that was founded in 1856, nearly 170 years ago. It’s best known for its trench coats and beige check patterns. While many luxury brands have moved production offshore, Burberry’s trench coats are still made in Castleford, Yorkshire.

👉 What happened: The past 12 months have been somewhat challenging for Burberry after its revenue dropped 17% to £2.46 billion. But even worse than that, it went from a £270 million profit to a £75 million net loss. So now, Burberry is pulling out the shears as it plans to cut 1,700 jobs globally, which is nearly a fifth of its workforce.

👉 What else: Off the back of this news, Burberry’s shares jumped 17% because investors want to see that even luxury brands are responding to market conditions.

What's the key learning?

💡Even prestige brands feel the pinch when consumer sentiment drops. Luxury brands often get painted as recession-proof, but it’s not always the case.  

💡Burberry is especially feeling the pinch in markets like China. Get this: Chinese shoppers are responsible for around 22% - 24% of global luxury spending and when those shoppers pull back, Burberry feels it. In fact, over the past 12 months, Burberry has suffered a 15% fall in Chinese sales.

💡Burberry aren’t alone in the fashion trenches:

• Gucci’s sales dropped 25% in the most recent quarter
• Saint Laurent experienced a 9% decrease in sales
• Balenciaga saw a 7% decline in sales

So even if your brand is strong, you can’t ignore macro conditions or assume people will keep buying even when confidence dips.