Cost-cutting helps profit soar more than 40% at Burberry in first half
CEO Marco Gobbetti, who took the helm in 2017, is shaking up the brand with a strategy overhaul that aims to add more luxury to Burberry's products
London — Burberry says net profits jumped 42% in its first half after the British luxury fashion group slashed costs, while looking to benefit from the designs of new chief creative officer Riccardo Tisci.
Profit after tax increased to £132m in the six months to the end of September compared with £93m a year earlier, Burberry said in a statement on Thursday.
Revenues fell 3% to £1.22bn, offset by cost savings of £80m.
"We are energised by the early results as we begin to transform and reposition Burberry," said CEO Marco Gobbetti, who took the helm in 2017. Gobbetti is shaking up the brand with a strategy overhaul that aims to add even more luxury to the fashion house's products, which include its famous trench coat.
One of his first moves was to appoint Tisci.
"The initial response from influencers, press, buyers and customers to our new creative vision and Riccardo's debut collection Kingdom has been exceptional," Gobbetti said Thursday.
"Mindful that we are only in the first phase of our multi-year plan, we continue to manage dynamically through the transition."
Burberry confirmed its outlook for its 2018-2019 financial year, which includes total cost savings of £100m.
Tisci's debut show came at London Fashion Week in September, where the Italian designer presented Burberry's 2019 spring/summer collection.
Tisci broke with the label's tradition by presenting a range of evening dresses.
Meanwhile on Thursday, Burberry's share price gained 0.7% to £18.28 on London's benchmark FTSE 100 index, which was up 0.4% overall.
"The company reported smashing numbers ... and its half-year adjusted profit was £173m, a number which was ahead of consensus number of £169m," noted Naeem Aslam, chief market analyst at Think Markets.
Burberry recently ended an industry-wide practice of burning unsold products and has decided to stop using real fur and angora in its clothes following pressure from animal rights groups and environmental organisations.
Burberry and its peers have been burning tens of millions of dollars worth of products annually to maintain the exclusivity and luxury mystique of their brands.