Burberry is shedding 1,700 jobs, about 20 percent of its global workforce, in the latest sign of trouble in the luxury goods market.

The job cuts come as the British luxury house pursues a turnaround effort to try to improve its performance, which has been hurt by product mistakes and price hikes.

The company’s chief executive tried to put a positive spin on a 6 percent drop in sales that was announced on Wednesday.

“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,” CEO Joshua Schulman says.

The company is concerned about the impact that tariffs will have on sales in the months ahead. Almost 20 percent of Burberry sales come from the United States. The company noted “geopolitical developments” in deciding not to release specific targets for the full year in the earnings release.

“The tariff turmoil has increased worries,” a managing partner at advisory firm Ortelli & Co., Mario Ortelli, tells Reuters. “This is not helping the sentiment of the luxury consumer.”

Burberry’s turnaround efforts come as the entire industry is seeing a shrinking consumer base. Rivals LVMH, which owns Louis Vuitton, and Gucci owner Kering have also recently reported earnings declines, with both American and Chinese markets remaining weak.

A McKinsey study says the industry’s rapid expansion over the past five years has led to “overexposure and has weakened the industry’s promise of exclusivity, creativity, and craftsmanship.” It claims consumers are questioning the luxury promise of uncompromising product quality and personalized, white-glove service.

A recent Bain-Altagamma Luxury Goods Worldwide Market Study finds that overall luxury spending dropped by 1 percent to 3 percent in 2024. The report predicts longer-term growth for the luxury market but it expects spending to move away from products in favor of travel and social events.

Consumers are also leaning more into secondhand luxury. That segment of the market grew 7 percent last year as rising prices push new luxury items out of the reach of lower-end customers.

While luxury continues to attract strong interest from high-net-worth individuals, the entry-to-luxury segment continues to contract. The report finds the luxury customer base has shrunk by about 50 million people over the past two years. It says younger shoppers are abandoning luxury brands, and the losses are especially acute among Generation Z.

One analyst predicts the luxury goods market will contract further in 2025, which would mark the longest downturn for the industry in 20 years, according to Reuters.