Burberry ‘encouraged' by turnaround progress amid job cuts
The London fashion house revealed that retail revenues fell by 6% to £433 million for the 13 weeks to June 28, compared with a year earlier, amid a drag from currency rates.
However, it reflected a slowdown in the group's sales decline amid efforts to turn around its fortunes after coming under pressure from weaker luxury spending.
Last November, the group launched a £40 million cost-cutting programme after first sinking to a loss.
In May, the company announced proposals to cut about 1,700 jobs worldwide over the next two years as part of the shake-up.
In its fresh update, Burberry said it has made some progress in its transformation efforts but is still in the 'early stages' of the potential turnaround.
The company said: 'In the first half, we are continuing to prioritise investment and expect to see the impact of our initiatives build as the year progresses.'
It pointed towards efforts to simplify its operations and improve productivity in a bid to improve profit margins.
In the latest quarter, Burberry said there were improvements across its main regions, amid strong sales of 'outerwear and scarves'.
Comparable retail sales grew by 1% in Europe, the Middle East, India and Africa (EMEIA) as positive local spending helped to offset declines among tourists.
Meanwhile, its Americas business reported growth of 4% for the quarter.
However, it said sales in Greater China fell 5% for the quarter, while its Asia Pacific division saw a drop of 4%, driven by a 'challenging performance in Japan'.
Joshua Schulman, chief executive of Burberry, said: 'The improvement in our first quarter comparable sales, strength in our core categories, and uptick in brand desirability gives us conviction in the path ahead.
'Our autumn 2025 collection is being well received by a broad range of luxury customers as it arrives in stores.
'Although the external environment remains challenging and we are still in the early stages of our transformation, we are encouraged by the initial progress we are starting to see.'
The boss also highlighted that the business was continuing to see weak trading from tourists in London.
The firm reiterated recent calls for the Government to consider reintroducing the scheme which allowed foreign visitors to claim back VAT, which was scrapped in 2021.
'In the UK we still continue to have international consumers not shopping in the UK to the extent we would do. And that does link to the lack of a VAT refund scheme.
'We would like to see changes from the Government which would encourage tourism and shopping, and that is a lever they could pull.'
Dan Coatsworth, investment analyst at AJ Bell, said: 'Having stabilised the business, there is evidence Schulman is beginning to gain some traction with his turnaround effort.
'Although sales are still declining, the rate of decline has slowed considerably and by more than the market expected.
'The problem is that Burberry is operating against less than favourable market conditions, so it could end up running hard just to stand still.
'It was notable to see the business acknowledge the challenging backdrop and its key Chinese market, in particular, remains under pressure.'
Shares in Burberry climbed by 6.4% in early trading.
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