Burberry Turnaround Gains Traction on Americas and China Growth

CNBC reported Thursday that the Burberry turnaround is gaining momentum, with the British luxury brand delivering full-year revenue of £2.4 billion. Growth in the Americas and China drove a stronger-than-expected close to the fiscal year.

Strong Quarter Caps a Pivotal Year

Comparable sales rose 2% across the full fiscal year. The Americas and China each posted 10% comparable sales growth in the final quarter ended March. CEO Joshua Schulman credited the results to a strategy that is now clearly delivering, calling it a return to profitable growth. Analysts at Citi described the performance as having every box ticked, with execution firmly on track. Shares dipped around 5% in early London trading despite the upbeat tone, suggesting investors had already priced in much of the recovery.

Profit Recovery Marks Sharp Reversal

Full-year adjusted operating profit reached £160 million, a dramatic improvement from just £26 million in the prior year. Analysts at Jefferies noted the profit figure beat consensus forecasts by roughly 4%. They largely attributed that outperformance to Burberry’s disciplined cost-reduction programme rather than a pure top-line surprise. The firm cautioned the result may still fall short of the most optimistic buy-side targets.

Background: A Sector Under Pressure

Burberry’s revival comes as much of the broader luxury sector has struggled. Rivals including LVMH, Kering, and Hermes each missed earnings expectations last month, weighed down by soft Middle Eastern demand. The Middle East had been a relative bright spot for the sector in earlier periods, typically generating mid-single-digit revenue contributions for major houses. Burberry itself flagged a 2% comparable sales decline across EMEA and India in the quarter, citing reduced regional tourism and the ongoing conflict’s impact on consumer confidence late in the period.

Outlook Cautious but Constructive

Despite the solid results, Burberry acknowledged a complex external environment. The company pointed to geopolitical uncertainty and its potential drag on consumer sentiment as factors to monitor. Still, management said it expects further progress against its financial targets through 2027. Outdoor peer Moncler, which reported a strong quarter in April, provided an early signal that selective luxury names could weather near-term headwinds.

Read Next: LVMH, Kering Earnings Miss as Middle East Luxury Demand Falters