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Burberry announces turnaround plan after profits fall by 10%

18th May 2016 Print

As Burberry reports its full year results Helal Miah, Investment Research Analyst at The Share Centre, explains what they mean for investors.

“Burberry indicates that 2017 profits are likely to be at the bottom end of its range after announcing the second straight fall in annual earnings. Adjusted pre-tax profits fell 10%, which is only slightly higher than analysts’ expectations. Pressure remains on Burberry to turn things around after sales in Hong Kong have fallen 20% in three straight quarters and spending in Europe and the US remains soft.

“Investors will note that Burberry has announced an ambitious three year plan to deliver at least £100m a year in cost savings. However, the difficulties highlighted in today’s results are only likely to put more pressure on its CEO, with some analysts and investors starting to question his ability to lead the company.

“The slowdown in China is still concerning and is the key reason we maintain our ‘hold’ recommendation on the stock.”