Burberry sees clear improvement, but full recovery still a work in progress

Burberry announced its half-year results on Thursday and a year into its Burberry Forward turnaround plan, CEO Joshua Schulman said his “belief in this extraordinary British luxury house is stronger than ever”. It’s not just about coats and scarves either as demand growth is impacting other categories.

But did the numbers support Schulman’s upbeat stance? Well, revenue continued to fall in the six months to late September and it still made an operating loss on a reported basis. But that loss was smaller than a year ago and on an adjusted basis, it actually swung to a profit.

So let’s look at the figures for the premier British luxury label. Revenue in the period fell 5% on a reported basis to £1.032 billion, with a 3% constant exchange rate (CER) drop.

Retail comparable store sales were flat, which is a good result when you compare it to a 20% drop in the previous year.

As mentioned adjusted operating profit was £19 million compared to a £41 million loss on that basis a year earlier. That came as the adjusted operating margin increased to 1.9% from a deficit of 3.8%. The gross margin of 67.9%, was up 410bps CER and 450bps at reported rates.

But the reported operating loss was still £18 million, although this was significantly improved on a loss of £53 million this time last year. The reported operating margin was negative at 1.7% but that was much better than the negative 4.9% of the previous year.

The loss before tax was £48 million compared to an £80 million loss in the previous year and the company paid £15 million more in tax this time.

Regional improvements

Looking at those flat comparable store sales, they actually increased 1% in EMEIA and 3% in the Americas during H1. But they were down 1% in greater China and down 2% in Asia pacific as a whole. That said, if we look at those figures for Q1 and Q2 we can see definite improvements in the problem regions. The group was down 1% in Q1 but up 2% in Q2, EMEIA was up 1% in both quarters and the America’s rose 4% in Q1 and 3% in Q2. But a 5% drop in greater China for Q1 turned into a 3% rise for Q2. And the Asia pacific 4% Q1 drop turned into flat comp sales for Q2.

Sales divided by channel were down overall with Retail stores down 3% on a reported basis at £854 million and down 1% CER. Wholesale fell 12% reported and 11% CER to £148 million, slightly ahead of its guidance of a mid-teens decline reflecting phasing and some uplift in in-season orders from its key strategic partners following improved sell-out of Autumn 25. Overall, it plans to have a “smaller, better quality wholesale business going forward”. And licensing fell 5% reported and 8% CER to £30 million, with ongoing strength in its fragrance and beauty business, including the Goddess and Her franchises, offset by the planned destocking of older fragrance lines.

Outerwear up, leather goods still challenging

The company also said that Outerwear outperformed in all regions for the first half and Q2, while Softs continued to show strong performance with double-digit growth for the half and Q2. Leather goods improved sequentially between the quarters but “remained challenging overall” in the half.

But despite those sales channel sales drops, the numbers do seem to justify the CEO’s confidence, particularly given the contrast between the first and second quarters.

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The company said it saw “strengthened brand desirability through our Timeless British Luxury expression; [and] accelerated cadence of distinctly British storytelling, creating universally recognisable stories and imagery”. And it added that there has been a “strong customer response” to AW25 collections and pleasingly the “initial momentum in Outerwear and Scarves [is] now extending to other categories”.

The “positive reception to the Summer 26 collection” is leading to “increased demand from opinion-leading wholesale partners” as well.

And it’s attracting new customers while welcoming back existing customers to the brand, “with sequential improvement in customer growth”.

Additionally, the cost efficiency programme is on track to deliver £80 million in annualised savings by the end of FY26.

Is this boosting its outlook for the year as a whole? The company said that “we are still in the early stages of our turnaround, and the macroeconomic environment remains uncertain. Our focus this year is to build on the early progress we have made in reigniting brand desire, as a key requisite to growing the top line. We expect to see the impact of our initiatives build as the year progresses. We will deliver continued margin improvement with a focus on simplification, productivity and cash flow. We remain confident that we are positioning the business for a return to sustainable, profitable growth”.