Burberry's new chief executive set out his vision for the company's growth this morning, as it revealed a modest increase profit expectations.
The market responded negatively to Gobbetti's idea to push the brand upmarket, with shares down as much as 13 per cent in early trading, currently down almost 11 per cent at 1,769p.
Overall revenue in the six months to 30 September was up nine per cent to £1.26bn and the brand achieved four per cent growth in comparable store sales.
Pre-tax profits jumped 26 per cent to £128m, due to an improved profit margin of 1.6 per cent, compared with 12.5 per cent hits time last year.
Adjusted earnings per share were up at 32.8p and the interim dividend was nudged up to 11p from 10.5p.
Due to expected cost savings of £60m and slightly less adverse effects from currency rates, Burberry gave a "marginal" upgrade to projections for the full year.
Why it's interesting
Following the announcement that creative chief and former CEO Christopher Bailey will exit the business, investors were hoping to see some direction from Gobbetti.
The new boss released a strategy update in which he said Burberry would prioritise digital expansion and a product-first approach.
"By re-energising our product and customer experience to establish our position firmly in luxury, we will play in the most rewarding, enduring segment of the market," he said.
"We have the foundations to build on and the team to execute our plans. This will enable us to drive sustainable growth and higher margins over time, whilst continuing to deliver attractive returns to shareholders."
But no mention was made of Bailey's departure or the succession process, leaving it unclear who will take creative control of the brand.
What Burberry said
Marco Gobbetti detailed his outlook for 2019 and 2020 in his strategy update, saying that the company expects revenue and margins to remain stable. Cost savings and a reduction in tax rate will offset restructuring costs, he said.
"There will be a period of transition as we implement our strategy, during which we expect to remain strongly cash generative and are committed to our capital allocation framework."