The Burberry Group plc (LON:BRBY) (BRBY.L) share price has gained 2% after its full year results were released to investors. The Burberry share price may be higher because of the continued strategic actions which are being taken by the business.
Its leadership team has been strengthened, with key appointments made with people with experience in luxury and business transformation. Its targeted cost savings are also on target. Burberry has delivered £20 million savings in FY2017, which is planned to increase to £50 million in FY2018. It is also targeting cost savings of at least £100 million in 2019.
In spite of the progress made, Burberry’s revenue slipped 2% on an underlying basis to £2.8 billion. However, this was up 10% at reported forex. Retail revenue represented 77% of revenue and was up 3% on an underlying basis. Wholesale revenue was down 14% on an underlying basis.
Burberry’s adjusted profit before tax was up £42 million to £462 million. This is in line with guidance, but is 21% lower on an underlying basis. This was partly due to the strategic actions being taken to enhance its long-term growth story.
In the last 3 months the Burberry share price is flat. This compares to better performance from other consumer stocks such as ASOS plc (LON:ASC) (ASC.L), Boohoo.Com PLC (LON:BOO) (BOO.L) and Diageo plc (LON:DGE) (DGE.L). The ASOS share price is 16% higher, Boohoo is up 33% and Diageo shares have risen 3%.
In my view, Burberry has a bright future from an investment perspective. I think the actions it is taking to improve its business could lead to better financial performance. I like the strength of its brand and feel it has a relatively high degree of customer loyalty. I also believe the addition of a new CEO could help the company to fulfil its potential. Therefore, I’m optimistic about the Burberry share price on a relative basis.