- Luxury fashion retailer aiming for £100m cost savings due to “challenging” environment
- Full-year adjusted pre-tax profits fall 8% to £421m
- Like-for-likes slip 1%. Total sales down 1% to £2.5bn
- Warns that pre-tax profits for current year will be at “bottom” of expectations
Burberry has outlined plans to make “at least” £100m of cost savings over the next three years as it reported a slip in full-year profits and sales.
The global luxury brand and fashion retailer said cuts would be made as the “challenging external environment continues” and demand for luxury goods remains “subdued”.
The group said “broadly” half the savings will come from “significant changes” in the way it works by “reducing complexity, simplifying processes and eliminating duplication”.
The £100m savings equate to around 10% of Burberry’s operating expenses, excluding rent and depreciation.
It plans to make £20m in savings in its current financial year and a total of £200m by the end of its 2019 financial year.
The group also warned that adjusted pre-tax profits in its current year will be “towards the bottom of the range of analysts’ expectations”.
Burberry chief executive Christopher Bailey said: “While we expect the challenging environment for the luxury sector to continue in the near term… we continue to see significant opportunities ahead of us and have put ambitious plans in place to increase future revenue, enhance productivity and create a more efficient organisation.”
The move came as Burberry reported that adjusted pre-tax profits in the year to March 31 fell 8% to £421m. Like-for-likes slipped 1%.
Total underlying sales dipped 1% to £2.5bn.
Burberry has been particularly hurt by falling demand in China and Macau. The firm said Hong Kong, which accounted for 9% of its global retail and wholesale sales, had been hit by a “significantly lower footfall”.
In the last year, Burberry opened 18 stores and shut 17. Openings included Dubai, London, Moscow, New York, Seoul and Tokyo.
In its current financial year, it plans 15 store openings globally, with a “similar” number of closures. Burberry has been shifting its focus to retail, which now accounts for 73% of group sales.
It also plans to re-launch its ecommerce site and launch an app.