BUSINESS LIVE: Burberry turnaround plan; United Utilities lifted by invoice hikes; Young’s sees £11m Budget hit

Aarin Chiekrie, equity analyst, Hargreaves Lansdown:

‘The plan is to return focus to the brand’s origin – outerwear. Newly minted CEO Joshua Schulman plans to tap into the brand’s heritage to regain its footing in this category, before expanding into other areas.

‘But it’s a careful balance, and Mr Schulman won’t want to make the same mistake as his predecessors of skewing Burberry’s offering to a narrow base of luxury customers at the expense of a loyal fanbase.

‘Back to recent performance and it was a painful read for investors. Revenue fell at double-digit rates as the group saw declines across all regions, which meant Burberry slipped into loss-making territory over the first half.

‘Cost cuts are underway to try and stem some of the financial bleeding, with £25mn of excess material set to be trimmed from the expense line this year. But with no full-year guidance given, it’s unclear whether it can return to profit in time.’

Young’s has become the latest hospitality firm to outline the impact of employer national insurance hikes and an increase in the minimum wage laid out in the Autumn Budget.

It came as the pub group revealed revenues had soared more than 27 per cent in teh six months to 28 September to £250million, with adjusted earnings before nasties up 23.2 per cent to £59million.

Boss Simon Dodd said:

‘I am very pleased with our performance and the progress we have made during the period, which has been achieved despite some challenges.

‘The new Government’s budget will result in significant increased costs for our industry in the near term through rises in National Minimum Wage and Employer’s NI payments.

‘We expect the cost impact to be approximately £11 million on an annualised basis from next April. We will work to see how we can mitigate these headwinds without passing on all the cost to our loyal customers.

‘We would like to see certainty and delivery of real business rate reform which will benefit all hospitality businesses.’

Northwest England water suppler United Utilities expects revenues to soar 10 per cent this year after reporting a more than two-fold rise in first-half profit, supported by pricier consumer bills.

It means revenues for the year to the end of March 2025 are on track for analyst estimates of £2.13billion.

The sector has been under extreme regulatory and public scrutiny, especially as the largest of the British water suppliers, Thames Water, risks running out of funds if financing talks with creditors fall through.

United Utilities posted underlying pre-tax profit of £182.9million for the six months to 30 September, compared with £90.3million a year earlier.

Burberry new chief executive Joshua Schulman has kicked off a turnaround strategy designed to return the struggling fashion brand to growth, as sales continue to plummet.

Revenues fell 20 per cent to just short of £1.1billion in the 26 weeks to 28 September, with the group slumping to a £41million adjusted operating loss for period from a £223million profit over the same period last year.

Schulman told shareholders this morning:

‘My first few months have reaffirmed my belief that Burberry is an extraordinary luxury brand, quintessentially British, equal parts heritage and innovation. Burberry’s original purpose to design clothing that protects people from the weather is more relevant than ever.

‘Our recent underperformance has stemmed from several factors, including inconsistent brand execution and a lack of focus on our core outerwear category and our core customer segments.

‘Today, we are acting with urgency to course correct, stabilise the business and position Burberry for a return to sustainable, profitable growth. We have a powerful brand with broad appeal among luxury customers, authority in the outerwear and scarf categories which have remained resilient through this period, and a strong presence in all key luxury markets.

‘Now, we have a clear framework to reignite brand desire, improve our performance and drive long-term value creation. Building on our strong foundations, I am confident that Burberry’s best days are ahead.’