Burberry profits slide as strategic repositioning continues

Burberry's interim profit before tax was down 34% at £102m as the effects of the luxury house's repositioning are being felt. Revenues were down 4% on an underlying basis at £1,159m.

The results, which chief executive and chief creative officer Christopher Bailey said were in line with expectations, reflect some of the strategic action the business is undertaking such as reducing its exposure to wholesale and licensing, as well as a decline in sales in its beauty business.

In the UK a strong retail performance, on the back of a weak pound, was offset by the anticipated declines in wholesale and licensing. Overall retail/wholesale revenue was down 3% underlying at £1,146m, while adjusted retail/wholesale operating profit was £134m, down 19% underlying, reflecting lower revenue and some modest gross margin pressure, offset by cost saving. Licensing profit was down 53% underlying at £11m, reflecting the planned expiry of Japanese licences.

"In May we outlined plans to evolve how we work as a business and to drive Burberry’s future growth in a rapidly-changing luxury environment. Since then, we have made good early progress towards realising the significant opportunities ahead of us, as we begin implementing our five strategies. We remain on track to deliver our financial goals," Bailey said.

The business' five strategic priorities and progress against them were reported as follows:

Product focus

Innovation and newness resonating with customers; strength in bags as continue to develop category

Productive space

Focus on customer cultivation and retail service; increased investment in global training and expanded Burberry Private Client team

E-commerce leadership

Digital grew in all regions; launch of redesigned website and strong growth from digital third-parties

Operational excellence and inspired people

Simplifying our structure and processes to enhance efficiency and effectiveness; on track to deliver planned cost savings of around £20m in FY 2017

Brand reach and engagement building

Exceptional response to runway show and collection