LONDON – First-half operating profit at Burberry Group was up 24 percent to 127 million pounds on revenues of 1.26 billion pounds, as new chief executive officer Marco Gobbetti laid out his new strategy, with plans to thrust Burberry fully into the luxury arena.
The company said Thursday that revenue in the six months to September 30 was up 9 percent on a reported basis and 4 percent on an underlying one, with comparative retail sales also rising 4 percent. The profit boost, it said, came from a “significant improvement” in beauty profitability following Burberry’s new license with Coty, which came into effect on Oct. 2.
Shares were down 11 percent to 17.58 pounds in mid-morning trading.
In a separate statement alongside the first-half results, Gobbetti laid out his first strategic moves in the wake of the news that Christopher Bailey plans to depart at the end of 2018. Bailey, chief creative officer and Burberry president, plans to pursue new creative projects after he leaves the company.
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Gobbetti, who has begun his hunt for a new creative to head Burberry, said that since the company went public in 2002, it has enjoyed growth but the market has changed drastically.
“The luxury consumer demands innovation, curation and excitement from brands and creativity at every turn,” said Gobbetti. “To win with this consumer, we must sharpen our brand positioning. This will require us to change our approach to product, communication and customer experience. Building on our strong foundations, we will establish our position firmly in luxury enabling us to deliver sustainable long-term value.”
He said Burberry will reshape its offer, “increasing and invigorating the fashion content. We will create compelling luxury leather goods and accessories to attract new customers. We will build on the strength of our apparel and re-energize it. We will build our offer to provide a complete look for our customers, while continuing to simplify our ranges.”
Product will be at the core of the company’s communication, Gobbetti said, adding Burberry plans to slash the number of “non-luxury wholesale and retail doors,” with an initial emphasis on the U.S. and then Europe, the Middle East and Africa.
Other stores will be refurbished and luxury services enhanced. “We will continue to lead innovation in digital, delivering personalized experiences and true omnichannel services,” he said.
Profits for the year ended March 31 fell 7.3 percent to 286.8 million pounds, or $375.7 million, while revenue in fiscal 2016-17 was down 10.4 percent on a reported basis, and 2 percent on an underlying one to 2.77 billion pounds, or $3.63 billion.
Fiscal 2016-17 had been a tough one for Burberry, which 12 months ago laid out a restructuring and cost-savings plan aimed at honing the brand for a future of slower growth for luxury goods, and for a digitally engaged, want-it-now customer base.