Become a Member
  • Track your favourite stocks
  • Create & monitor portfolios
  • Daily portfolio value
Sign Up
Quickpicks
Add shares to your
quickpicks to
display them here!

TOP NEWS: Burberry reports loss and launches new strategic plan

14th Nov 2024 09:56

(Alliance News) - Burberry Group PLC on Thursday reported a challenging first half of 2025, swinging back to a pretax loss and experiencing a significant revenue decline as it introduced its new "Burberry Forward" strategic plan.

The London-based luxury retailer posted a pretax loss of GBP80 million for the six months to September 28, compared to a profit of GBP219 million a year ago. Revenue for the period dropped 22% to GBP1.09 billion from GBP1.4 billion.

As previously announced, Burberry suspended its half-year dividend for 2025, a shift from the 18.3 pence per share payout in the prior year. The company said that this move is aimed at preserving a strong balance sheet and supports investments in Burberry's long-term growth.

Comparable store sales declined by 20%, with significant decreases across key regions. In Asia Pacific, sales dropped by 25% in the first half, with Mainland China seeing a 24% decrease. The Americas experienced a 21% decline, and EMEA was down 10%.

Adjusted operating loss reached GBP41 million, primarily due to impairment charges and inventory provisions.

The British fashion house outlined a new strategic plan, "Burberry Forward", aimed at reigniting the brand by returning to its roots as a quintessentially British luxury house.

Chief Executive Officer Joshua Schulman said: "Our recent underperformance has stemmed from several factors, including inconsistent brand execution and a lack of focus on our core outerwear category and our core customer segments. Today, we are acting with urgency to course correct, stabilise the business and position Burberry for a return to sustainable, profitable growth."

Immediate actions included a campaign focusing on outerwear, enhanced online styling, and cost-saving initiatives aimed at achieving GBP40 million in annualised savings.

In the past 12 months shares in Burberry have fallen 40%. On Thursday morning, shares rose, however, by 15% to 843.80 pence.

Burberry is confident that its strategic plan will drive long-term value and improve performance, but the brand acknowledges that the results of the second half may not fully offset first-half losses. The company remains "optimistic" about achieving its goal of GBP3 billion in annual revenue over time.

Third Bridge associate Alex Wong said: "Burberry's recent results fell short of expectations, with management citing softer market demand. Yet, our experts suggest its new strategy—including higher prices and a more elite positioning—may also be driving the slowdown."

In the past 12 months shares in Burberry have fallen 40%. On Thursday morning, shares rose, however, by 15% to 840.90 pence.

Burberry has encountered multiple trading setbacks, intensified by a weakening macroeconomic environment and declining demand in the key luxury market of China.

In July, Burberry parted ways with its CEO Jonathan Akeroyd after just two years, replacing him with Joshua Schulman.

In early November, reports surfaced that Italian luxury goods firm Moncler SpA may be considering a bid for Burberry, amid “growing industry chatter” following Burberry’s substantial drop in market value over the past year.

The reports also indicated that Bernard Arnault, controlling shareholder of LVMH Moet Hennessy Louis Vuitton SE, is supportive of the potential deal. In September, LVMH acquired a 10% stake in Double R, Remo Ruffini's investment vehicle, which owns 15.8% of Moncler. This transaction gives LVMH an indirect 1.6% stake in Moncler Group.

Regarding Moncler's potential takeover, Alex Wong said: Moncler's potential acquisition of Burberry does not make sense, as the two brands have distinct identities. Moncler is casual and Italian, while Burberry is formal and British. They see no clear synergies between them in terms of products or target markets.

Moncler shares rose 1.2% to EUR46.87 in Milan on Thursday morning.

By Eva Castanedo, Alliance News reporter

Comments and questions to [email protected]

Copyright 2024 Alliance News Ltd. All Rights reserved.

FTSE 100 Latest
Value8,071.19
Change40.86