Burberry launched turnaround plan as sales, profits plunge

(Sharecast News) - Luxury goods brand Burberry on Thursday suspended its dividend and launched a review of the business in an "urgent" effort to turnaround its struggling fortunes after slumping to a £80m half-year loss driven by plunging sales in its key Chinese market. New chief executive Joshua Schulman said "Burberry forward" would target £40m in savings and focus on "reconnecting our brand with its original purpose".

Revenues plunged 22% to £1.08bn with sales down 24% in mainland China as consumers in the world's second largest economy reined in spending, especially in the second quarter which say a 27% slump. Burberry made a £223m profit a year earlier.

Sales were also down 26% in South Korea and 2% in Japan as a 9% decline in the second quarter offset a 6% rise in the first three months of the financial year.

Burberry said with the key Christmas period ahead and an uncertain macroeconomic environment it was "too early to determine whether our second-half results will fully offset the first half adjusted operating loss".

Former Michael Kors boss Schulman took over in July after the company ousted Jonathan Akeroyd after just two years in the role. It also suspended dividend payments and issued a profits warning after weak global demand battered first-quarter sales.

Reporting by Frank Prenesti for Sharecast.com