Burberry cuts cloth as profits slide

Luxury fashion group Burberry on Wednesday announced a fall in annual net profits, triggering a three-year programme of cost savings totalling at least £100 million ($144 million, 128 million euros) .

Profits after tax dropped 8.0 percent to £309.5 million in its financial year that ended March 31 as the group was hit by weak performances in Hong Kong and Macau, the handbag and clothing company said in an earnings statement.

That compared to net profit of around £336 million in 2014/15.

Burberry, which last month warned that its new financial year would see profits at the bottom end of expectations, added Wednesday that it had "identified a programme of actions to deliver at least £100 million... cost savings" by 2019.

"Broadly half is expected to come from significant changes in our ways of working, by reducing complexity, simplifying processes and eliminating duplication," it said in the statement.

Group chief executive and chief creative officer Christopher Bailey added in the statement that while it expects "the challenging environment for the luxury sector to continue in the near term", the company is "firmly committed to making the changes needed to drive" Burberry forward. 

The company that is famous for its camel, black and red check patterned raincoats meanwhile said that revenues fell 1.0 percent to £2.5 billion in its last financial year.

Burberry's share price was down 2.8 percent at £11.11 in early deals on London's benchmark FTSE 100 index, which was half a percent lower compared with Tuesday's close.

"Trading conditions in Hong Kong have taken their toll on Burberry, and the company is responding to challenging conditions by cutting its cloth accordingly, aiming for £100 million of annual cost reductions by 2019," said Steve Clayton, head of equity research at stockbrokers Hargreaves Lansdown.