British luxury goods group Burberry (LON:BRBY) reported a return to profit for the half ended 26 September which demonstrated that CEO Joshua Schulman’s turnaround strategy is working.
Comparable retail sales grew by a better-than-expected 4% in Q2. This marked the firm’s fifth consecutive quarter of growth. Burberry also flagged an improvement in China, a key market for purveyors of bling.
While mindful of the ‘uncertain external environment’, Burberry said it expects to deliver revenue growth and margin expansion in FY27. Investors liked the news and sent shares in the luxury fashion house nearly 10% higher in early dealings.
Back in fashion
London-headquartered Burberry swung from losses of £48 million to pre-tax profits of £19 million in H1, as revenue increased by 6% to a forecast-beating £1.1 billion. The trench coats-to-cashmere scarves seller reported double-digit Outerwear growth, strength in Leather goods with an acceleration in Q2, as well as a mid-teens percentage rise in e-commerce sales.
By region, Greater China grew by 5% in Q2 and 7% in H1, driven by local spend and intraregional tourism. ‘We outperformed a challenging market supported by strong brand positioning, localisation and execution,’ said Burberry.
Elsewhere, Q2 comparable sales increased by 11% in the Americas. Unfortunately, Q2 sales declined by 2% in EMEIA (Europe, the Middle East, India & Africa) due to the continued impact of reduced tourist activity and weak traffic trends in the Middle East.
What did the CEO say?
‘Two years ago, we launched Burberry Forward. Today, our brand and our business are stronger,’ insisted Schulman. ‘Five consecutive quarters of growth and improved quality of sales demonstrate that our strategy is working. In H1, we delivered growth across Womenswear, Menswear, Childrenswear and Accessories in an uncertain environment.’
Schulman added: ‘Having laid the foundations for growth, I am more confident than ever that we will realise the full potential of this extraordinary British luxury brand.’
Despite a challenging global market for luxury goods, Burberry has dragged itself back to growth and profitability.
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, and the company is luxuriating in broad-based growth as a result.
| Comparable sales by region | Group | EMEIA | Americas | Greater China | Asia Pacific |
| Q2 | +4% | -2% | +11% | +5% | +3% |
| H1 | +4% | -2% | +12% | +7% | +3% |
Source: Burberry, interim results
Today’s positive results and stock price reaction are good news for well-followed fund manager Nick Train. He holds Burberry as a top 10 position in his Finsbury Growth & Income Trust (LON:FGT) and has consistently championed the enduring strength of the British luxury brand.
