Burberry has announced plans to cut a potential 1,700 jobs worldwide as part of efforts to slash staff costs and return the luxury fashion brand to a profit. The company said it was hiking its cost-cutting target to £100 million of savings per year by the 2027 financial year. The news will likely come as a blow to Rachel Reeves’s drive to grow the UK economy.

These savings will partly come from a reduction in “people-related costs”, the firm said, which could affect around 1,700 jobs globally over the two-year programme. The British brand revealed it had tipped into a loss of £3 million in the year to March 29, swinging from a profit of £418 million the previous year.

Retail comparable store sales fell 12% year-on-year, with a 16% slump in sales across Asia dragging on the total.

Chief executive Joshua Schulman told investors: “While we are operating against a difficult macroeconomic backdrop and are still in the early stages of our turnaround, I am more optimistic than ever that Burberry’s best days are ahead and that we will deliver sustainable profitable growth over time.”