Burberry reports a significant operating loss amidst declining revenues for the first half of 2024.
- The company recorded a pre-tax loss of £80m compared to a £219m profit previously.
- Revenue fell by 20% to £1.08bn, with retail and wholesale segments hit hard.
- Licensing revenue showed resilience with a 5% increase to £32m.
- CEO introduces ‘Burberry Forward’ strategy to reignite brand performance.
Burberry, a renowned British luxury fashion house, is facing financial hurdles as it disclosed an operating loss of £53 million for the period ending September 28, 2024. The brand, previously enjoying a strong financial position, has reported a shift from a £219 million pre-tax profit last year to a £80 million pre-tax loss in the current period. Such figures reflect a substantial decline in the company’s revenue streams, which dropped by 20% to a total revenue of £1.08 billion.
The decline in revenue has been largely driven by a significant decrease in both retail and wholesale sales. Retail sales fell by 19% year-on-year, amounting to £885 million. Similarly, wholesale operations experienced a sharp decline, with sales plummeting 29% to £169 million. These downturns point to challenges in brand execution and customer engagement, particularly concerning Burberry’s core outerwear category and its key customer segments.
Despite the overarching negative trend, Burberry’s licensing revenue presented a glimmer of hope by recording a 5% increase to £32 million. This segment seems to have provided some financial cushion amid the broader declines in other areas. Burberry’s CEO, Joshua Schulman, who took over in June, has noted the urgent need to rectify the company’s course and steer it back towards profitability. His plan, titled ‘Burberry Forward’, aims to leverage the brand’s strong market presence and appeal among luxury customers.
This strategic plan focuses on several key initiatives aimed at revitalizing Burberry’s market position. These include aligning pricing strategies with established category authorities, enhancing the brand’s wholesale and outlet presence, and balancing fashion innovation with campaigns reinforcing Burberry’s expertise in outwear. The execution of these strategies is expected to be facilitated by better synergy between Burberry’s commercial and creative teams.
Burberry remains confident in achieving long-term financial goals, as emphasised by their projection of generating a £3 billion annual revenue. The company is optimistic about rebuilding its profit margins and strengthening cash generation through its refined strategies and continued brand innovation.
The unveiling of ‘Burberry Forward’ aims to usher in a new era of growth and financial stability for the luxury brand.
