Even after announcing job cuts and collapsing profits, Burberry's share price rises

As markets evaluate the success of the turnaround plan, Burberry's share price has surged despite the company's collapsing profits and the possible loss of 1,700 jobs

This morning, Burberry's stock price has risen over 14%, even though the company's adjusted operating profits have dropped 94% in the last year.

Despite adjusted losses of 14 point 8p per share for the year ending March 29, shares of Burberry (LON:BRBY) have risen. You can follow all markets on TradingView.

Burberry is not currently among the most well-liked stocks in the world. Considering the turbulent year Burberry had just finished, there were low expectations for its FY 2025 results.

However, the share price increased as investor sentiment improved due to a positive Q4 and indications that the FTSE 250 company's turnaround plan is working.

Joshua Schulman, CEO of Burberry, stated, "After a difficult first half, we have moved at pace to implement Burberry Forward, our strategic plan to enhance our performance, drive long-term value creation, and reignite brand desire."

With Q4 performance above overall expectations, the plan seems to have had an instantaneous and noticeable effect.

"With the first half loss of 41 million followed by a second half profit of 67 million, the improved performance over the most recent part of the year dragged the group into positive territory on adjusted operating profit basis," says Richard Hunter, Interactive Investor's head of markets.

Still, Burberry's stock price has dropped 22% over the last 12 months and 63% over the last two years.

Adam Vettese, a market analyst at eToro, says that Burberry shareholders have had a difficult year thus far, with shares having nearly halved from their February peak. But the news this morning might suggest that the turnaround strategy is starting to work. Compared to analyst estimates of a 778% decline, Burberry's Q4 comparable retail sales fell by 6%.

The announcement that Burberry may eliminate 1,700 jobsroughly a fifth of its global workforcebetween now and 2027 as part of additional cost-cutting measures was one of the release's most striking features.

Job cuts at Burberry increase stock value.

With the prospect of 60 million in annualized savings by 2027 as part of organizational changes announced in preliminary results, investors appear to be encouraged by the cost-cutting plan announced today, perhaps contributing as much to the share price increase.

"This will be crucial in keeping investors on board and should support margins, even if sales continue to be weak," said Charlie Huggins, manager of Wealth Club's Quality Shares Portfolio.

Joshua Schulman, the CEO, stated that the majority of the 1,700 impacted jobs will be in global head offices, including London. The night shift at Burberry's Castleford, Yorkshire, factory will be eliminated, but about 150 jobs will also be lost.

"For a long time we have had overcapacity at that facility and thats simply not sustainable at this point," said Schulman.

Head of money and markets at Hargreaves Lansdown Susannah Streeter says, "The goal is to reduce weight and adopt a leaner silhouette to deal with the uncertainty ahead."

Luxury declines due to Asian tariffs.

Burberry's FY25 has been dubbed "an annus horribilis" by Huggins.

"Almost everything that could go wrong did. Globally, luxury consumers drastically reduced their spending, which had an impact on the entire luxury market," he said.

"Burberry is dealing with difficult conditions in the mid-market luxury sector," Streeter says. "It lacks the allure of its ultra-luxe competitors, and aspirational consumers are more wary because they lack the substantial financial resources to shield them.

Additionally, the effects of Donald Trump's tariff policy pose a threat to luxury brands like Burberry. Relations between the two superpowers remain icy, and there are concerns that China's economy may suffer unless a comprehensive trade agreement can be reached, even though trade between the US and China has increased due to a recent pause in the highest reciprocal tariffs.

For Burberry, that is significant because China is a major force behind the global luxury market. Although the nation accounts for about 22% of Burberry's revenue, sales to mainland China fell 8% in Q4 and 15% over the previous year.

While businesses in the luxury sector are facing similar difficulties, Burberry is particularly hard hit.

Unquestionably, the industry faces common difficulties, such as China's slowing demand and wider macroeconomic pressures, according to Vettese.

Companies that focus on clothing, like Burberry and Kering, are having more trouble than their jewelry-focused counterparts, like Richemont, which saw record sales.

But compared to its rivals, Burberry's wholesale issues, which result from its strict distribution control, are less noticeable," he continued.

Burberry's problems are not limited to China. The Asia Pacific region saw a 16 percent decline in sales, while South Korea saw an 18 percent decline in revenue. Throughout the year, South Asia Pacific sales decreased by 28%.

Although the group is still far from being out of the woods overall, Hunter says Burberry Forward's immediate impact is a very positive indication.