Burberry blames “challenging environment” as sales fall in full-year profits
Burberry has announced ambitious plans to turn around its fortunes, after sharing disappointing results for the full year to 31 March 2016. The company announced a 1% decrease in revenue to £2.5bn with profit down 10% to £421m.
In response, the company is aiming to deliver a turnaround in the next three years. It hopes to out-perform the industry and deliver enhanced revenue growth. An in-depth review of the company's processes will be undertaken to help determine ways of streamlining the business and cut £100m in costs by 2019.
Christopher Bailey, CEO and Chief Creative at Burberry, explained: “While we expect the challenging environment for the luxury sector to continue in the near term, we are firmly committed to making the changes needed to drive Burberry’s future outperformance, underpinned by strong brand and business fundamentals.”
Despite the cost-cutting plan Bailey was optimistic about the future. He said: “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. In addition, the capital allocation framework announced today prioritises the investment needs of the business and regular dividend payments to our shareholders, while balancing capital efficiency and flexibility.”
The plan comes after Burberry announced that it would be moving all its products onto one label and changing the schedule of its runway shows to match consumer buying patterns. The company has also invested heavily in social media, with a Snapchat story posted on the launch of Mr Burberry and another fragrance campaign shot live on Instagram by Brooklyn Beckham.
In April, Burberry announced that sales had dropped after the number of Asian tourists visiting its stores in Europe dropped following terrorist attacks in the region. It also reported slowing sales in Hong Kong.