LONDON (AP) — Luxury clothes maker Burberry has announced wide-ranging cost-cutting plans after reporting a drop in earnings due in part to weak sales in Asia.
The company said Wednesday it planned at least 100 million pounds ($144 million) in cost-cutting by the fiscal year 2019.
The move comes as it reported that net income dropped to 310 million pounds in the first quarter, from 336 million pounds in the year-earlier period. Revenue fell to 2.51 billion pounds from 2.52 billion pounds, with a poor performance in Hong Kong and Macau.
Luxury goods makers are struggling with the slowdown in the global economy and falling demand from high-end consumers in China.
CEO Christopher Bailey said the brand remains strong despite the "challenging environment" that is expected to continue in the luxury sector. The company did not provide details of its cost-cutting plans, indicating it aims to "reduce complexity and simplify processes" to fuel future growth.
Richard Hunter, research chief at Wilson King Investment Management, said "the ambitious cost-cutting program will be aligned with an attempt to boost productivity, but in the meantime metrics such as earnings per share and profits have moved in the wrong direction."
He said it is not clear when Asian consumers will start spending freely on luxury items again.