Burberry on track to save £100m amid transformation plan
Luxury fashion brand Burberry said its transformation plan is on track to deliver cost savings of £100 million this year, as it hailed an “exceptional” reception for its new head designer.
Cumulative cost savings reached £80 million, with the group confirming a goal for the full year of £100 million.
Adjusted operating profit fell by 4% on a reported basis but was up 8% at constant currency.
Comparable store sales rose 3% in the first half, as new creative director Riccardo Tisci took the helm.
Chief executive Marco Gobbetti said the reception of Mr Tisci’s first collection for the house had been “exceptional”.
Burberry’s overall revenue was down 3%, reflecting a move to take beauty products out of house through a strategic partnership with Coty last year.
Excluding the impact of last year’s beauty wholesale income, revenue climbed 3% to £1.22 billion.
Higher like-for-like sales in stores included growth in the UK, despite concerns of weaker consumer demand and lower tourist spend.
Asia Pacific also saw mid-single digit growth, as Chinese spend shifted to tourist destinations such as Hong Kong and Korea.
The region has been a concern for investors as the threat of a trade war between China and the US weighs on consumer sentiment.
Mr Gobbetti said the company was “energised” by early results of the transformation process.
“Mindful that we are only in the first phase of our multi-year plan, we continue to manage dynamically through the transition,” he said.
The company is in the process of closing some shops and pulling out of department stores as it targets high-end shoppers.