British luxury goods group Burberry (LON:BRBY) racked up sales growth in all divisions for the first time in three years in Q1. This encouraging result demonstrated that CEO Joshua Schulman’s turnaround strategy is working.
Increased spending by well-heeled US shoppers offset the negative impact of the Middle East conflict. And the London-headquartered fashion house upgraded H1 FY27 wholesale guidance following a positive response from partners.
So why was Burberry the biggest faller on the FTSE 100 in early deals on Friday?
Well, Q1 comparable sales growth of 5% came in shy of more optimistic forecasts. And the trench coats-to-cashmere scarves seller’s cautious outlook statement spooked investors.
Americas lead the way
For the 13 weeks to 27 June, retail revenue grew 5% to £455 million. Comparable retail sales rose 5%, led by continued strength in the Americas and Greater China.
Burberry notched up growth across womenswear, menswear, accessories and childrenswear all at the same time. Outerwear proved the star turn. Double-digit growth was delivered on the back of strong demand for Burberry’s rainwear and lightweight jackets.
Geographically, the Americas led the way with comparable retail sales growth of 12%. Greater China sales grew 9%, driven in part by strong interest among Gen Z customers, while South Korea revenue rose 11%.
Japan saw a 2% decline as Chinese tourist numbers remained subdued. And sales were down 3% in the EMEIA region. This reflected the ongoing impact of the Middle East conflict on tourist spend.
For FY27, Burberry expects to deliver revenue growth and margin expansion. However, management remains ‘mindful of the uncertain geopolitical and macroeconomic environment and its potential impact on consumer confidence.’
Outerwear outperforms
‘For the first time in three years, we saw growth across our womenswear, menswear, accessories and childrenswear divisions, anchored by the outperformance of outerwear,’ commented Schulman.
‘Our strategy is working. We are attracting a broad range of luxury customers across product categories, channels and geographies, reinforcing my confidence in the opportunities ahead.’
Burberry’s Q1 update was fairly positive. It confirmed a recovery is underway at the leather goods giant.
As well as the momentum in its stores, e-commerce continued to show good growth during Q1. Wholesale is expected to grow nicely in H1 FY27, and Burberry continues to deliver significant cost savings.
Since taking over as CEO in 2024, Schulman has halted his predecessors’ push to take the brand upmarket. Price cuts have made Burberry accessible and affordable to more shoppers.
Unfortunately, there wasn’t enough bling in today’s update to allay fears about the wider luxury sector. Considering the cautious tone to Burberry’s FY27 outlook, and with store traffic remaining challenging, we would sit on the side-lines until the industry backdrop improves.
Read the press release here: https://www.burberryplc.com/investors
