Burberry has launched a £40 million cost-cutting programme as part of a plan to turn the company around, after sales continued falling in the second quarter.

Chief executive Joshua Schulman, who joined the company in July, said he wants it to focus on “productivity, simplification and financial discipline”.

The fashion house swung to a £53 million loss for the half-year ending September 28, down from £223 million profit for the same period last year.

Revenue fell 20% year on year to £1.09 billion, as the London-listed firm also suspended its dividend payments to shareholders.

Mr Schulman said the turnaround plan will involve improving the business’s website and in-store productivity and shaking up pricing.

He added that the company, founded in England in 1856, needs to focus on well-known products like outerwear and cater more for its core customers.

In a strategy update on Thursday, the company said it had focused on modernising its brand “at the expense of celebrating our heritage”.

It added that its “pricing, particularly in leather goods, did not always align with our category authority. Consequently, Burberry’s offer was skewed to a narrow base of luxury customers”.

Burberry has struggled from a stagnant market in the luxury sector, with its key Chinese market hit particularly hard.

Sales in its mainland China stores fell 24% in the first half, and the rate of decline accelerated in the second quarter.

Mr 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.”

Chief financial officer Kate Ferry declined to comment when asked about potential job cuts arising from the cost savings plan, but said it has so far “been about changing ways of working and more efficient ways of working”.

Meanwhile, she said the Government’s decision to increase employers’ national insurance contributions has “had an impact”, but did not elaborate.

Burberry recently dropped out of the FTSE 100, with its shares falling to their lowest level since 2009 earlier this year.

Share prices received an unexpected boost in recent weeks amid reports that Moncler, which also owns Stone Island, was considering buying Burberry.

However, no mention of a potential takeover offer was made in Thursday’s interim results, and further reports this week emerged suggesting a deal will not be done.

Asked about the reports on Thursday morning, Mr Schulman said: “We obviously make no comment on speculation.”

He added: “We have a lot of opportunity ahead and there is a lot more we can do as a plc (publicly limited company)”.

Kathleen Brooks, research director at investment firm XTB, said the company “still has a mountain to climb”, pointing to the continued slump in China.