The Strategy Of Robbing Talent By Luxury Goods Has Gradually Changed To Reducing Wages And Layoffs, Just For The Winter.

In the cold winter, executives who had turned the tables on them were hard to find.

There was a war between duer and duer, but now the strategy of snatching talents has gradually changed to pay cuts and layoffs for the winter.

Four years ago, the salary of CEO of Burberry company once occupied the top of the industry, up to 16 million 900 thousand euros, now the salary is only 1/9 of that year.

A pay cut of 75%

The high price and high profit luxury industry has been recognized as a highly paid profession.

However, as the industry continues to decline, there is no hope of recovery. Since last year's high salary has been dug up, it has gradually reduced to pay cuts and layoffs.

British luxury brand Burberry revealed in its 2016 fiscal year report that the company's current CEO and chief creative officer, Christopher Bailey Christopher (Bailey), was cut by 75% due to poor performance.

Bailey paid 2016 in fiscal year 1 million 890 thousand, including basic salary of 1 million 100 thousand pounds, 330 thousand pounds pension and 464 thousand pounds of benefits and allowances.

In the 2015 fiscal year, his salary is still 7 million 510 thousand pounds.

Coincidentally, the Swiss luxury group, the peak group, also reported the news of pay cuts recently, and it was not a senior executive but a senior executive committee.

Including fixed salary decreased by 8%, incentives and bonuses and other parts dropped by 30%.

Public information shows that the senior executive committee of the group has been composed of two joint chief executives and chief financial officers.

One of them, CEO Bernard Fornas, resigned at the end of March, and his salary was 9 million 700 thousand Swiss francs, down 17.1% from the previous year.

Another joint CEO Richard Lepeu paid a total of 9 million 700 thousand Swiss francs in fiscal year 2016, a sharp drop of 32.2% over the 14 million 300 thousand Swiss Franc last year.

The chief financial officer of the group was 8 million 500 thousand Swiss francs, a 14.1% decline compared to the same period last year.

The tide of wage cuts is spreading.

Swatch (Swatch) group CEO paid 6 million 900 thousand Swiss francs in the 2016 fiscal year, down 7.7%.

Failure of performance

The data show that there are many determinants of corporate executive compensation, including external environment, internal institutional environment, executive's own background, and the role of senior management.

Pay fluctuations are often linked to their performance.

The performance of these luxury brands involving executive pay cuts is even worse in the fiscal year.

Burberry released its 2016 fiscal year end results as at the end of March, showing an income of 2 billion 523 million 200 thousand pounds, adjusted pre tax profit of 420 million 600 thousand pounds, down 1% and 10% respectively over the previous fiscal year.

Because of the dual responsibilities of the Burberry CEO and the chief creative officer, Bailey has been questioned by the outside world, but there is no news of the job change at the moment.

Overseas rumours suggest that the board of directors will continue to support Bailey and may hope to hire professional managers to assist Bailey.

The results of the 2016 financial year announced by the peak group show that the sales volume is 11 billion 76 million euros, without considering the exchange rate factor, which is slightly down 1%. Net profit is 2 billion 227 million euros, offset by the appreciation of the franc, and the increase is 66.9%.

In the first month of the new fiscal year, April, the sales volume of the group fell by 15%.

Go on a diet for the winter

In fact, even the most luxury brands that have not yet implemented a pay cut, most of the performance in the 2016 fiscal year is not satisfactory.

The analysis pointed out that after 2014-2015 years of expansion and deceleration, or even shrinking stores and reducing investment, the brand still did not see a marked improvement in the first half of fiscal year 2016, so the outlook for the future is still not optimistic.

Utah International

Yang Dayun, President of the brand investment company, said that the global economic situation in 2016 was complex and could be seen as an eventful year.

Major European and American luxury goods markets face many uncertain political and economic factors.

The new US presidential election, the Fed's rate hike expectations, the spread of terrorism in Europe, the French strike, the UK's departure from the EU and other uncertainties have caused an endless stream of economic uncertainty.

For luxury brands, the outlook is uncertain, and the main market has not recovered. These factors may lead to a vicious circle of economic downturn and may become more severe in the future. Therefore, we need to make preparations for the long winter.

Yang Dayun believes that the original brand side may hope to reduce the expansion of China's gradual downturn in emerging market investment, insurable performance is stable, but contrary to expectations, the company must not enter the second stage, that is, substantially reduce wages or layoffs, cost savings.

Burberry announced last month that it will cut costs and streamline business in the next three years, with the goal of saving 100 million pounds a year.

In the middle of fiscal year 2016, the company also said it had cut 20 million pounds of travel and pportation benefits, 30 million pounds of bonuses and stock incentives throughout the year.

Continuing

"The tide of pay cuts is not the worst stage," Yang Dayun said. If the luxury market environment continues to deteriorate in the second half of 2016, Brand Company's performance will be even worse. At that time, it will enter the third stage, selling some assets and selling the group's unprofitable brands to return the funds.

He predicts that the company will sell a second tier brand which is not well-known.

However, it will also be an opportunity for Chinese enterprises to acquire internationally.

At the beginning of this year, the local enterprise, Ed, bought the American fashion brand, Hardy. Shandong Ruyi bought the French light luxury clothing group and put its Sandro and Maje brands into the online store.