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Written by: Aarin Chiekrie | Hargreaves Lansdow
Burberry – new strategy announced to return the brand to its roots
- Burberry’s half-year revenue fell 20% to £1.1bn.
- Underlying operating loss of £41mn vs £223mn profit last year.
- Free cash outflows worsened from £15mn to £184mn.
Burberry has announced a strategy update in an attempt to reignite desire for the quintessentially British brand. The plan is to return focus to the brand’s origin – outerwear. Newly minted CEO Joshua Schulman plans to tap into the brand’s heritage to regain its footing in this category, before expanding into other areas. But it’s a careful balance, and Mr Schulman won’t want to make the same mistake as his predecessors of skewing Burberry’s offering to a narrow base of luxury customers at the expense of a loyal fanbase.
Back to recent performance and it was a painful read for investors. Revenue fell at double-digit rates as the group saw declines across all regions, which meant Burberry slipped into loss-making territory over the first half. Cost cuts are underway to try and stem some of the financial bleeding, with £25mn of excess material set to be trimmed from the expense line this year. But with no full-year guidance given, it's unclear whether it can return to profit in time.
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