Burberry looks to cut costs following ‘disappointing’ quarterly performance

West Yorkshire-based fashion brand, Burberry, has warned it might suffer an operating loss for its first half as it issues its first quarter trading update today.

It recorded retail revenue for the period of £458m (2023: £589m) with quarter one FY25 comparable store sales falling 21%. Burberry says all the regions it operates in declined, apart from Japan.

The business explains it has been hit by a backdrop of slowing luxury demand, adding that it is rebalancing its product offering to include a broader everyday luxury offer and a more complete assortment across key categories.

Burberry also says it is driving operational efficiencies and delivering cost savings to offset the impact of inflation.

Gerry Murphy, chairman, said: “Our quarter one FY25 performance is disappointing. We moved quickly with our creative transition in a luxury market that is proving more challenging than expected.

“The weakness we highlighted coming into FY25 has deepened and if the current trend persists through our quarter two, we expect to report an operating loss for our first half.

“In light of current trading, we have decided to suspend dividend payments in respect of FY25. We are taking decisive action to rebalance our offer to be more familiar to Burberry’s core customers whilst delivering relevant newness.

“We expect the actions we are taking, including cost savings, to start to deliver an improvement in our second half and to strengthen our competitive position and underpin long-term growth.”