Burberry profit flat as cost cuts offset revenue fall
Burberry's underlying profit was unchanged last year as cost cuts offset a decline in revenue at the luxury clothing brand.
Adjusted operating profit for the year to the end of March fell 6% to £438m but excluding currency movements profit was flat. Revenue at constant exchange rates fell 1% to £2.72bn and operating costs fell 1% to £1.42bn. Pre-tax profit rose 7% to £441m.
The FTSE 100 company said operating profit would fall in the first half of the current year with profit growth returning in the second half as new designer Riccardo Tisci's collections build during the year. Burberry increased its guidance for cost savings to £135m by 2022 from £120m after beating its target last year.
Burberry has been through more than a year of upheaval after its chief executive and design guru Christopher Bailey stood down in 2017. Marco Gobetti took over as CEO and brought in Tisci as chief designer to revive the waning brand. Tisci's first collection hit the shops in February 2019.
Gobbetti said: "We made excellent progress in the first year of our plan to transform Burberry, while at the same time delivering financial performance in line with expectations. Riccardo Tisci's first collections arrived in stores at the end of February and the initial reaction from customers is very encouraging. The implementation of our plan is on track, we are energised by the early results and we confirm our outlook for full-year 2020."
The company's gross margin fell by a percentage point to 68.4% due to foreign exchange movements and higher investment in products. Burberry increased its dividend by 3% to 42.5p.