200 jobs axed as Burberry offloads make-up division

BURBERRY has told up to 200 staff that their jobs could be axed as it sells its perfume division to a US cosmetics group, the Mail can reveal.

The luxury brand is licensing its beauty operations to Rimmel-maker Coty, which is paying £130m for the global licence and a one-off fee of £50m for the assets.

But it means Burberry’s UK staff who were working on its fragrances and cosmetics ranges will no longer be required.

The Mail understands that between 150 and 200 staff, including some in other departments such as packaging and accounts, have been told their jobs are under threat.

A consultation period will run until October when Coty takes over the beauty business, and staff have been offered extra money to stay on until then.

Burberry declined to comment, but it is understood that chief executive Christopher Bailey delivered the news to the affected staff himself.

Burberry brought its beauty division in-house four years ago when it paid £144m to take back the licence from previous supplier Inter Parfums.

In that time it has launched fragrances including My Burberry and Mr Burberry and relaunched its make-up range – with a campaign featuring Jude Law’s and Sadie Frost’s daughter Iris Law.

But management of the business has weighed on costs and held back growth, and the new arrangement allows Burberry to retain creative control with minimal financial output.

As part of the Coty deal, Burberry will take a £30m one-off cash cost, thought to include the effect of redundancy payments. Analysts at Exane BNP Paribas said at the time the Coty deal was announced: ‘We never liked the idea of Burberry managing its beauty business directory.

‘Burberry was a dwarf in the land of giants in this industry, and never had sufficient scale to run this business effectively.’ Burberry is in the first stage of a three-year plan to cut costs, stem declining US sales and revamp its tired-looking designs.

It has committed to saving £100m a year by slimming down its range of products, cutting jobs and simplifying its processes.

While Burberry would not break-out the number of workers it employs in the UK, the figure is thought to be about 4,000.

It has also brought in new blood to revitalise the business, with Marco Gobbetti, from French brand Celine, due to take over as chief executive from Bailey. Although Bailey, 45, is relinquishing the senior role, he will remain chief creative officer – but he is likely to bring in fresh designers.

The latest blow to staff follows disappointing results in November when the company reported that first-half revenues had slipped 4pc, while it has also been grappling with a decline in luxury spending, and a slowdown in US department store spending.