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Burberry’s new chief executive said he was “acting with urgency” to stabilise the British luxury brand as it swung to a half-year loss and unveiled a turnaround plan, sending shares up 11 per cent on Thursday.
The company, which has had a challenging time over the past year amid a downturn in luxury spending and a botched strategy to move upmarket, warned it was too early to say whether it would be back in profit this year.
Chief executive Joshua Schulman set out a new £40mn cost-savings plan on Thursday and said he would “course correct” to “position Burberry for a return to sustainable, profitable growth”.
Revenue fell 22 per cent to £1bn in the six months to September 28, from £1.3bn the year before, dragged down by weaker performance in Asia and the US. It posted a pre-tax loss of £80mn, compared with £219mn profit the previous year, and an adjusted operating loss of £41mn.
Schulman, who previously worked for Coach and Jimmy Choo and joined the business in July, set out measures to “reignite brand desire, improve our performance and drive long-term value creation”, including by refocusing on core products such as outerwear and scarves.
The company, best known for its trenchcoats, had sought under its previous boss Jonathan Akeroyd to put “Britishness” at the heart of efforts to revive the brand and take it more upmarket, but the move backfired.
Chair Gerry Murphy admitted previously that Burberry “probably went a bit too far, too fast” with its premium ambition.
The company’s stock has fallen almost 57 per cent over the past year.
Schulman said on Thursday that the product line-up had been overly “weighted to seasonal fashion with a niche aesthetic obscuring our more timeless core collections”.
He added that part of his plan was to prioritise Burberry’s outerwear such as its checked trenchcoats and scarves, increase store productivity and achieve better pricing.
Schulman noted that Burberry’s recent underperformance “stemmed from several factors, including inconsistent brand execution and a lack of focus on our core outerwear category and our core customer segments”.
