Page last updated at 16:24 GMT, Tuesday, 19 May 2009 17:24 UK

Burberry plunges into annual loss

Burberry store
Burberry is seen as well placed to restructure itself effectively

Luxury clothing brand Burberry has plunged into an annual loss, mainly due to charges at its Spanish operations.

The company made a pre-tax loss of £16.1m for the year to 31 March, down from profits of £195.7m last year.

Revenues rose 21% to £1.2bn. Its retail operations generated half the group's revenues for the first time.

The year "was one of the most challenging years the luxury sector has ever faced, especially in the second half", Burberry said.

"Against this background, Burberry grew revenue to £1.2bn. We also took rapid action to mitigate the impact of the economic slowdown," said chief executive Angela Ahrendts.

"Entering the new year, we believe Burberry is best positioned to capitalise on opportunities which will deliver sustainable long-term growth."

The company is engaging in a £50m global cost efficiency programme, a substantial portion of which consists of shutting stores in Spain, where revenue declined 11%.

Pain in Spain

Burberry in January said it would cut up to 290 jobs in the UK, and a further 250 jobs in Spain as it closed its Thomas Burberry line.

It reduced its headcount by about one-third in Spain, where Burberry has historically operated as middle-to-upmarket rather than as a luxury brand.

The luxury retailer opened 16 stores and 22 retail concessions last year, and plans a net 10 to 15 new Burberry stand-alone stores in the current financial year.

Shares in the company fell 0.9% to 397.75 pence following the release of its results.

Burberry's shares have risen 79% so far this year on hopes the company will restructure its operations effectively and withstand the recession.



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