Shares at Burberry have increased after the luxury fashion brand announced a cost saving programme to unlock annual savings of £40m.

Reuters has reported that shares increased by 14% in early trading, putting them on course for their biggest one-day gain since March 2020, after shares had fallen by 40% so far this year, including the latest increase.

This comes as Burberry recorded a loss of £41m in the six months to 28 September. The firm’s revenue also dropped by 22% to £1.08bn in the same period.

As a result, the fashion brand has announced Burberry Forward, a strategic plan to "reignite brand desire", improve its performance and drive long-term value creation.

Burberry said that over the past several years, it had "moved too far" from its core products with "disappointing results".

It therefore is aiming to "increase store productivity through core category amplification" and "align pricing with category".

Chief executive officer (CEO) at Burberry, Joshua Schulman, said: "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."

Looking ahead, Burberry said it is "acting with urgency to stabilise the business and position the brand for a return to sustainable, profitable growth, supported by strong cash generation and balance sheet strength".

It added that it is confident in its strategic plan, believing that it will improve its performance and "drive long-term value creation."

However, the fashion brand said that in the short-term, with the festive trading period approaching and an uncertain macroeconomic environment, it is "too early to determine" whether its second-half results will fully offset the first-half operating loss.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, concluded: "Newly minted CEO 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 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 £25m 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."

---