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Can Burberry bags boost profits?

Wednesday, May 18, 2016 - 01:24

Burberry says it will overhaul its retail operations and simplify its product range after full-year profit fell 10 percent. As Hayley Platt reports, the British luxury brand says the tough market is set to persist this year.

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The Chinese are big buyers of the Burberry brand. They account for 40 percent of retail sales. But lately fewer tourists from the mainland have been travelling to Europe. And demand in Hong Kong is weak. That's hurt Burberry's full year profit - sending it down 10 percent. Profits before tax fell to £421 million - broadly in line with forecasts. (SOUNDBITE) (English) LONDON CAPITAL GROUP, HEAD ANALYST, BRENDA KELLY, SAYING: "I think it's going to take a lot for Burberry to restore its profits. Certainly the luxury sector is under pressure owing to slowing growth in China but Burberry are doing what they can I suppose. Cost cutting can only get you so far and unless the demand starts to pick up a little bit, not just in Japan and China then I think it will be all for naught." The group, best known for its trench coats and check print, plans to fightback. It says it will simplify its product range and cut costs. It also wants to focus on handbags - a fast growing area where Burberry lags behind its peers. (SOUNDBITE) (English) LONDON CAPITAL GROUP, HEAD ANALYST, BRENDA KELLY, SAYING: "It's certainly a niche market. I think there will always be a demand for the luxury handbag but I don't necessarily feel it's going to pull them out of the whole they've found themselves in over the last year." Burberry say its efficiency programme should cut the groups operating costs by around 10 percent. And make annual savings of at least £100 million by 2019.

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Can Burberry bags boost profits?

Wednesday, May 18, 2016 - 01:24