Burberry has reported a fall into loss territory with an axed dividend for the first half of its financial year after witnessing a significant downturn in sales.
For the 26 weeks ending 28 September, an operating loss of £53m was disclosed by the º£½ÇÊÓƵ luxury brand, which traced a steep drop from last year's £223m profit during the identical period, as reported by .
The fashion retailer encountered a 20% decrease in sales at constant exchange rates.
Additionally, Burberry announced it would withhold dividend payments for this period, in contrast to the previous year's interim payout of 18.3p per share.
This news emerges amongst speculations of takeover interest from industry peer Moncler, as reports suggest the group has been considering a move on Burberry for a while.
However, Burberrys shares experienced an uptick following the announcement, initially surging by up to 16% and then settling to a rise of around 13%.
‘Burberry Forward’
Coupled with these interim results, Burberry introduced its new business strategy Burberry Forward, aiming to reignite brand desire, improve our performance and drive long-term value creation.
The company intends to capitalise on its British heritage, honing in on strengths and shoring up the foundations.
Furthermore, Burberry is already advancing with Burberry Forward, having named new leadership in marketing, product merchandising, and Americas regions and outlining a plan to cut costs by £40m. It also indicated progressing more rapidly on trimming down surplus inventory across stores.
Despite witnessing some initial positive changes, Burberry has stated that it's premature to predict whether the second half of the year will makeup for the losses in the first half.
Burberry's recently appointed CEO Joshua Schulman commented: "My first few months have reaffirmed my belief that Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation."
"Our recent underperformance has stemmed from several factors, including inconsistent brand execution and a lack of focus on our core outerwear category and our core customer segments."
He further remarked: "Today, we are acting with urgency to course correct, stabilise the business and position Burberry for a return to sustainable, profitable growth. We have a powerful brand with broad appeal among luxury customers, authority in the outerwear and scarf categories which have remained resilient through this period, and a strong presence in all key luxury markets."
"Now, we have a clear framework to reignite brand desire, improve our performance and drive long-term value creation. Building on our strong foundations, I am confident that Burberry's best days are ahead."
