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Source: AFP
Troubled British fashion house Burberry on Thursday announced cost-cutting plans after posting a loss, with the global luxury sector pressured by weak Chinese demand.
Burberry reported a net loss of £74 million ($94 million) in the six months to the end of September, down from profit after tax of £158 million in the same period last year.
Revenue slid 22 percent to £1.09 billion, the group famed for its trench coats and trademark red, camel and black check design said in a statement.
"Today, we are acting with urgency to... stabilise the business and position Burberry for a return to sustainable, profitable growth," said recently-appointed chief executive Joshua Schulman.
Schulman said Burberry would refocus on outerwear, in-store productivity and reignite a "high-performance culture".
It came following reports that Italian fashion brand Moncler had shown interest in buying the 168-year-old label.
Burberry on Thursday added that it had halted dividend payments as it looks to save about £40 million.
"Over the past several years, we moved too far from our core with disappointing results," the group said.
Schulman was appointed CEO in July, replacing Jonathan Akeroyd.
In September, Burberry exited London's top-tier FTSE 100 stocks index after 15 years, with analysts citing strategic mistakes and weak demand from China.
It is now listed on London's second-tier FTSE 250, where its share price jumped 13 percent in early trading on Thursday following news of the turnaround plan.
China troubles
"The company has a long way to go and is not through its annus horribillis yet," said Kathleen Brooks, research director at trading group XTB.
She added that the brand needs to "focus on new markets due to the continued slump in demand for luxury goods in China".
The Asia Pacific region saw Burberry's largest slump in sales, with mainland China store turnover sliding 24 percent in the first half of the year.
China is the world's biggest spender in the luxury sector, accounting for half of global sales.
But as its post-pandemic recovery falters, consumption has flagged, sending jitters through the global luxury industry.
Last month, French luxury group Kering warned that its 2024 operating profit could come in at half of last year's level, as a sales slump at its flagship Gucci house worsens.
Sales at Kering-owned Yves Saint Laurent fell by 13 percent during the third quarter. The group's Balenciaga and Alexander McQueen brands also suffered slumping sales.
The Chinese government unveiled a stimulus plan in September to kickstart economic growth which analysts say could help boost luxury sales. However, so far the market response has been tepid.
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Source: AFP
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