LONDON — With its turnaround strategy in full swing, Burberry is back on a growth trajectory and attracting a new generation of shoppers, but the financial markets want more — and pronto.
In the first fiscal quarter, Burberry’s retail revenue rose 5 percent to 455 million pounds, bolstered by Gen Z and customers’ growing appetite for trenchcoats, scarves and handbags, the latter of which returned to growth in the three months ended June 27.
Same-store sales were up 5 percent in the fourth consecutive quarter of like-for-like growth. The first quarter was also the first time in three years that Burberry saw sales rise across all categories: women’s, men’s, accessories and childrenswear.
In the Americas, sales were up 12 percent, followed by Greater China, where they rose 9 percent, and Asia-Pacific, which notched a 3 percent gain.
The only region that contracted was EMEIA, or Europe, the Middle East, India and Africa. Burberry said the 3 percent decline was due chiefly to the impact on tourism of the war in the Middle East. Excluding the Middle East, EMEIA declined 1 percent.
The Middle East represents 2 percent of the Burberry business, and the company said the situation had already begun to settle down, with locals driving demand.
Burberry also raised its wholesale guidance for the first half to high-single-digit growth from midsingle-digit following a “positive response” from store partners.
The results were in line with consensus, and analysts were generally upbeat.
RBC Capital Markets said Burberry is “executing well and management is setting up the business with more confidence into [second half] peak trading, with midsingle-digit retail like-for-like sales and improving indicators.”
Chief executive officer Josh Schulman, who marked his two-year anniversary at the brand on Friday, was bullish about Burberry’s future.
“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. We believe that the best is yet to come,” he said.
Josh Schulman
But the positive start to the year wasn’t enough to satisfy the stock market. Burberry’s shares sank following the results, closing the day down more than 6 percent at 10.50 pounds on Friday.
Some analysts think Burberry needs to take things up a notch.
“Burberry has successfully gone through its first brand revival chapter. Burberry Forward works. The ball is now in management’s court to sustain the recovery, adding spice and oomph to it,” wrote Bernstein’s Luca Solca.
Yanmei Tang, an analyst at investment research firm Third Bridge, argued that Burberry is “recovering,” but not yet transforming.
“The recent rebound reflects Burberry’s return to its British heritage and the customers it had alienated. Growth should stay positive over the next 12 months, helped by easier comparisons. The marketing blitz, pop-ups and influencer campaigns are a signal that Burberry is back, but [they’re] not a permanent growth engine,” Tang wrote.
Burberry executives would disagree, and would argue they’re just getting started.
As reported, Schulman’s medium-term goal is to restore the company to its golden days of 3 billion pounds in annual revenue, with operating margin in the high teens. Once Burberry gets there, he wants sales — and profitability — to go far beyond those numbers.
Burberry has made strides over the past two years. Despite a luxury slowdown and tepid demand in China, the brand has managed to win over a new generation of customers.
In the first quarter, Burberry said it saw “outsized growth” from Gen Z customers in Greater China. Overall, the cohort born between 1997 and 2012 grew in the double digits.
Schulman described China as a “must-win” market, along with the U.S., and said Burberry was working hard to attract customers with localized events.
Last month Burberry released a three-part documentary series in China titled “Expedition With Burberry,” featuring its long-standing brand ambassador Chen Kun.
Created in partnership with Chinese National Geographic, the series showcases China’s vast natural landscapes and local cultures while emphasizing the British label’s outerwear heritage and enduring “spirit of adventure.”
In the show, Kun and his team wear lightweight Burberry jackets which have been piquing viewers’ interest — and driving them into stores. Burberry has also opened immersive pop-ups at Plaza 66 in Shanghai and other locations in the market.
“We’re quite excited about China,” said Schulman.
Sales in the outerwear category were up in the double digits, with “strong demand” across heritage rainwear, lightweight jackets and seasonal products. Burberry said its “Portraits of an Icon” campaign, which broke earlier this year and focused on celebrities wearing the trench, spurred a 19 percent increase in new rainwear customers.
Kendall Jenner and Little Simz in Burberry’s anniversary campaign, “Portraits of an Icon.”
Courtesy of Burberry/Tim Walker
Schulman also said the quarter marked a major moment for bags, with the elegant, boxy Cotswold style performing particularly well.
“We are now extending the authority we have in outerwear and scarves across our customers’ wardrobes. Bags in particular are a great embodiment of our strategy to deliver great product with strong luxury credibility and identifiable brand signifiers,” he said.
Burberry is also looking ahead, with plans to expand in one of its key European markets, Milan.
Next year the brand plans to open a four-floor flagship on Via Montenapoleone in the city’s Golden Triangle shopping district.
The restoration is already underway, with the building wrapped in a hoarding featuring one of Burberry’s signature trenches. The brand said it would continue to operate its nearby Via Sant’Andrea store until the new flagship opens in the second half of 2027.
On Friday, following the trading statement, Schulman also fielded questions about Britain’s incoming Prime Minister Andy Burnham, who will take up his new role on Monday, succeeding Sir Keir Starmer.
Schulman, like most luxury retail bosses here, would like to see the U.K. government restore the tax-free shopping program for foreign tourists, which was canceled when Britain left the European Union.
The lack of tax-free shopping means that high-end brands in London have been losing customers to Paris, Milan and other cities that offer VAT refunds to tourists.
Schulman said sales to tourists in Burberry’s London stores have declined by 50 percent since 2019, due chiefly to the repeal of tax-free shopping. He added that sales in Burberry’s Paris store, by contrast, are up by 30 percent.
“We know that the new prime minister has a busy day ahead of him, and a busy agenda. We would hope that restoring London as the most important shopping capital on this side of the Atlantic would be at the top of his list,” said Schulman, adding that overall, he hopes Burnham will take a “business-friendly posture” when he takes up residence at No. 10 Downing Street.
