NEW YORK – Tory Burch laid off around 100 employees last week throughout the company.
Although Burch would not confirm the number of layoffs, sources estimated it was around 3 percent of the company’s workforce. The firm has been investing heavily in technology and new businesses such as Tory Sport, as well as categories such as fragrances and watches, which are licensed to The Estee Lauder Cos. and Fossil, respectively. According to people close to the company, the firm has been reorganizing its business to put more emphasis on digital initiatives and investing in customer-facing technology. The company will open a permanent freestanding Tory Sport store in the Flatiron District of Manhattan in March.
Sources said the cost savings will be used for further investment in Tory Sport, technology and hiring more people. “It’s about hiring people with the requisite skills and experience for the right jobs,” said a source. The fast-growing 11-year-old company is on track to generate more than $1 billion in sales this year.
In an interview at the WWD CEO Summit in October, Roger Farah, co-chief executive officer, and Tory Burch, chairman, co-ceo and designer, said their priorities were the future development of Tory Sport, which was introduced this fall at retail, fragrances and watches, as well as strengthening the company’s Asian business and e-commerce.
The Burch layoffs follow the news in May that Ralph Lauren Corp. was laying off 750 people on its staff as part of a corporate restructuring. The layoffs at both firms come as a myriad of fashion companies are adjusting their strategies to cope with the new consumer landscape, which has been especially evident in shopping patterns so far this holiday season. Fashion as a category has continued to struggle as consumers search for more experiences and spend more on such things as eating out. When they are spending, they are seeking more deals and shopping more online. Burch and Lauren’s competitor Michael Kors Holdings Ltd. last month revealed plans to cut back on distribution in the department store channel in order to protect its brand and margins.
Another source familiar with the Burch situation noted that “mobile is fast emerging as the biggest revenue driver, which makes the retail footprint hard to manage.” Also, Millennials are proving to be less brand loyal than their predecessors. They seem to be willing to shop for the deal among comparable items, not caring as much where it comes from.