London (AFP) – Burberry narrowed losses in its first half, the British luxury fashion label said Thursday, thanks to sizeable cost-cutting begun a year ago. Its net loss stood at £26 million ($34 million) in the six months to the end of September, down on a loss after tax of £74 million one year earlier.
Faced with a drop in sales as the luxury sector suffered from weak Chinese demand, Burberry launched a cost-saving programme in November last year and hopes to save £80 million in its financial year, including via job losses. “While it is still early days and there is more to do, we now have proof points that Burberry Forward is the right strategic path to restore brand relevance and value creation,” chief executive Joshua Schulman said in Thursday’s earnings statement.
Burberry, famed for its trench coats, has refocused also on outerwear in a bid to improve its fortunes. Schulman was appointed chief executive in July last year after former CEO Jonathan Akeroyd left the group following weak results blamed also on poor strategy. The company in May said it could shed almost one-fifth of its global workforce, or 1,700 roles, over two years.
Signs of improvement were already evident in September when Burberry rejoined London’s top-tier FTSE 100 shares index, which it had exited a year earlier. The group announced Thursday that while total revenue fell five percent to £1.0 billion in its first half, the second quarter revealed some recovery. Following the updates, shares in the group rose four percent, while the FTSE 100 was down slightly overall in morning trades.
“Ongoing softness in Chinese demand and uncertainty around US tariffs present near-term risks, although Burberry’s European manufacturing base should offer some protection,” noted Robyn Duffy, consumer markets senior analyst at financial group RSM UK. “The next test will be whether the momentum seen in second quarter can extend through the key festive trading period and into 2026-27.”
China is the world’s biggest spender in the luxury sector, accounting for half of global sales. But as the country’s post-pandemic recovery continues to struggle, consumption has flagged, sending jitters across the globe. Founded in 1856, Burberry was awarded a royal warrant by Queen Elizabeth II in 1955, a stamp of approval on its quality.
© 2024 AFP
