- Sales fall 17% in year to March
- 2H operating profit positive
- Turnaround ‘in slow burn mode’
Despite a downbeat set of full-year results, investors in UK fashion house Burberry (BRBY) clung to some good news in the shape of its latest cost-saving plan which could result in up to 1,700 job cuts.
The shares, which were down 15% on the year before today’s update, gained as much as 80p or 9.5% to 907p, taking them to the top of the FTSE 250 leader board.
SLOW PROGRESS
For the year to end-March 2025, the luxury handbag, scarf and mac seller posted a 17% fall in reported revenue to £2.46 billion and a 94% fall in adjusted operating profit to £26 million.
Performance did improve in the second half, with operating profit of £67 million offsetting a first-half loss of £41 million, but after adjusting items the firm still made an operating loss and earnings per share dropped from 73.9p to a loss of 14.8p.
The company put its second-half turnaround down to its Burberry Forward programme to ‘reset the brand storytelling, enhance visual merchandising in stores and online, and align product focus to our core categories’, along with making £24 million of cost savings.
In total, the firm aims to unlock £100 million of cost savings by March 2027 from better procurement and property spending and a reduction of up to 1,700 roles globally.
Jefferies luxury analyst James Grzinic described Burberry’s attempted turnaround as ‘in slow-burn mode, as fourth-quarter sales momentum has not built on the third quarter’s sequential improvement despite a further softening in the comparison base’.
Moreover, the firm’s ‘unquantified’ guidance for an improvement in its EBIT (earnings before interest and tax) margin for 2025/26 ‘is not much of a stretch after the exceptional hurt to gross margins from inventory clearance and requires the help of extended cost-saving efforts’, added Grzinic.
‘We would tentatively read today’s referencing to a toughening macro backdrop and a back-end loading to this year’s delivery as indicating a mixed start to the new year on the sales front,’ concluded the analyst.
