Burberry Races Past Peers, Bucks Luxury Trend With 6% Rise in First-Half Revenue, Profit Growth

LONDON — The Burberry knight is galloping ahead of its European rivals, with fiscal first-half sales and profits on the rise in what continues to be a difficult climate for luxury.

Burberry reported a 6 percent uptick in first-half revenue to 1.1 billion pounds, and profit of 54 million pounds, compared with a loss of 18 million pounds a year earlier.

Adjusted operating profit more than tripled to 62 million pounds due partly to Burberry’s efforts to sharpen up its supply chain and keep a lid on costs. Adjusted operating margin rose to 5.7 percent, fueled by “better quality” sales with full-price transactions outstripping outlet sales in the half.

Comparable retail sales rose 4 percent in the first half and in the second quarter — the fifth consecutive quarter of growth for the British brand, which has been undergoing a turnaround under chief executive Josh Schulman.

All Burberry’s major product categories grew in the six months to Sept. 26, while wholesale revenue was up 17 percent in the period, outstripping guidance. All regions, with the exception of Europe, the Middle East, India and Africa, reported growth with Gen Z customer spend rising in the double digits.

A bullish Schulman said the Burberry Forward turnaround strategy, which he set in motion two years ago, is coming to life and said the company is gaining ground because of its “unique” space in the luxury market.

Schulman believes that Burberry sits in a “sweet spot” between Ralph Lauren with its 300-plus outlet stores and Hermès with its $15,000 handbags. Schulman said Burberry’s democratic pricing strategy, broad customer base, authority in outerwear and growing ready-to-wear and leather accessories categories are helping it win.

He described the second quarter as one of “outperformance in a challenging macroeconomic environment,” adding that at a time of luxury fatigue and high prices, “there has never been a better time to be Burberry.”

Investors responded with enthusiasm, sending shares up 6 percent to close at 11.63 pounds on Thursday.

Eyes on China and the U.S.

Bernstein’s Luca Solca said the 4 percent rise in retail sales was ahead of consensus expectations of 3.2 percent, “almost as good as Hermès, and 9 percentage points better than LVMH’s Fashion & Leather Goods division in the same quarter.”

Solca added that China, which rose 5 percent in the second quarter, outstripped consensus expectations of 4.8 percent, with growth driven by “local spend and intraregional tourism, reflecting a strong brand positioning, localization and execution.”

In the first half, sales in China rose 7 percent, while Asia-Pacific was up 3 percent.

Burberry has been working hard in China, connecting with Gen Z customers, creating localized Lunar New Year and Valentine’s Day campaigns and working closely with celebrity ambassadors such as Wu Lei, whose new cycling documentary has gone viral; the award-winning actress Tang Wei, and the veteran actor Chen Kun.

Earlier this year, Burberry released a series of short films in collaboration with Chinese National Geography magazine. And a few weeks ago, Burberry held a strategic session off-site with the board and executive committee in China.

“It was wonderful to go out and see the market together,” said Schulman.

In December, the brand will stage an exhibition in Shanghai called “Ever Forward: The Archive on Stage,” to mark Burberry’s 170th anniversary this year. Schulman has great faith in the market, and said Burberry is focused on its long-term potential.

“You should never underestimate the resilience of the Chinese consumer,” Schulman told analysts during a presentation at Burberry’s Horseferry House headquarters on Thursday.

During the six months, the Americas region was a growth engine with sales up 12 percent. Burberry said the increase was primarily driven by local customers, and supported by VIC, or very important customer, engagement through local activation programs and “strong conversion” in the stores.

The U.S. was also a big driver behind wholesale growth. Sales were so strong that Burberry now expects wholesale to grow between 10 percent and 12 percent in the full year, driven by key retailers including Bloomingdale’s, Nordstrom and Exemplar Luxury Group, formerly Saks Global.

Wholesale represents around 12 percent of Burberry revenue and remains an important channel, allowing Burberry to benchmark itself against its competitors, said Schulman, who has been slimming down the wholesale roster to focus on top performers.

EMEIA sales fell 2 percent in the six months, and was the only region to underperform in the period. Burberry blamed the “continued impact of reduced tourist activity and weak traffic trends in the region, particularly in the outlet channel.”

Excluding the Middle East region, EMEIA declined 1 percent in the second quarter and the first half.

More Than a Trench

In the first half, womenswear, menswear, childrenswear and accessories all grew, with outerwear sales climbing in the double digits. Leather goods also outperformed with an acceleration in the second quarter following campaigns promoting bags, boots, shoes and accessories.

Schulman said Burberry’s trench expertise and year-round outerwear offer have had a halo effect on other product categories.

As a result, Burberry is shifting rtw and accessories into high gear, rolling out pop-ups and in-store destinations for polo shirts, cashmere — where Schulman sees “significant potential” — scarf bars and soon-to-come “trench arcades” on the shop floor.

Schulman added that he was initially reluctant to make a big push on leather accessories given all the competition in Europe and Burberry’s past misfires in the category. But today the bags are selling.

The brand started with the B Clip and recently launched the Cotswolds and House Check accessories families.

“We have a sweet spot around 2,000 pounds, and those bags are doing well for us. Two years ago, we only had one category that was attracting new customers — rainwear. Now, we see that handbags and shoes are attracting new customers. Although it’s still early days, this gives us the confidence to have anchor families of leather goods that will attract people to Burberry,” he said.

But Schulman was quick to stress that Burberry “will never be a leather goods-driven brand. We will always lead with outerwear, but there is an important role for leather goods to play in our mix.” He added that the 2,000-pound handbags fit nicely at the top of Burberry’s “good, better and best” price pyramid.

Burberry is also banking on collaborations to enhance its rtw offer.

Designer Daniel Lee worked with the celebrated British illustrator Celia Birtwell on the flower-filled spring 2027 collection, while Burberry’s most recent tie-up with Palace on a limited-edition capsule was a hit. The scarves sold out “within hours” at Palace’s Soho store, the collaboration’s only stockist.

All Change

As it grows, Burberry is also embracing change.

Thursday was new chair William Jackson’s first day on the job. Jackson, founder and former CEO of Bridgepoint Group Plc, replaces Gerry Murphy, who is retiring this month after nearly nine years at the British company.

Jackson joined Burberry as a non-executive director on July 1, and Schulman said the handover was a smooth one. “Today is the last step in the handover, and we’re thankful to Gerry for his stewardship and leadership, and excited to work with William,” he said.

During an analyst presentation, Schulman also fielded questions about Frasers Group, one of Burberry’s wholesale clients, which currently holds a 6 percent stake in the company.

Schulman told analysts that Frasers, which owns retail chains such as Flannels, was one of its most important U.K. wholesale customers “and we will be meeting with them, as we do with all investors. We’re pleased they see value in Burberry.”

The acquisitive Frasers Group has just established a luxury division and counts Burberry as one of the companies in its portfolio, alongside Harvey Nichols and The Webster. Frasers recently cut its stake in Burberry to 6 percent from 7.42 percent, and it’s unlikely to attempt a full-blown takeover of the publicly quoted Burberry, which has a market capitalization of 4.23 billion pounds.

Schulman also spoke at length about upcoming investments, in its Yorkshire factories which make the trenchcoats, and in its Regent Street flagship in London.

Regent Street will undergo a major transformation next year that will take it beyond retail into a space meant to highlight the brand’s history, culture and creativity and offer visitors immersive experiences — as well as a cup of tea and a scone.

The store is being recast as “Burberry House,” and will bring together the collections, heritage, culture and hospitality offer under a single roof. The store will be the first to showcase the new Regent Concept, Burberry’s new global store design language, created in collaboration with the interior designer Peter Mikic.