Shares in luxury brand Burberry (LON:BRBY) tumbled over 10 percent on Thursday morning, as investors shied away from the high costs of CEO Marco Gobbetti’s growth plan.
The group made the announcement alongside a strong set of first half results, with revenue rising by an underlying 4 percent to £1.26 billion over the six months to September. Comparable sales rose by a better-than-expected 4 percent, with adjusted operating profit up 17 percent to beat forecasts at £185 million.
The company also laid out a growth plan for going forward, in the wake of the shock resignation of Chief Creative Officer Christopher Bailey. It aims to enhance the brand’s exclusivity, cutting sales to non-luxury stores and creating a new range every season.
However investors baulked at the cost of the plan, with Chief Financial Officer Julie Brown telling reporters that total restructuring costs would likely hit £110 million, almost double the previous estimate.
Capital expenditure would be £150-160 in the 2019 and 2020 financial years, growing to £190-210 million after.
CEO Marco Gobbetti said he was “pleased” with the group’s performance over the first half, adding that “consumers responded positively to fashion and newness, particularly in rainwear and leather goods”
Digital revenue grew in all regions, led by mobile, while growth was strongest in Burberry stores in Asia Pacific.
“I look forward to building on our strong foundations as we implement our strategy to drive Burberry forward”, Gobbetti concluded.
Shares in Burberry are currently trading down 9.87 percent at 1,789.00 (1031GMT).