Burberry Group LON: BRBY reported a return to comparable sales growth and a sharp improvement in profitability for its 2026 financial year, as management said its “Burberry Forward” transformation plan is gaining traction across key markets and product categories.
Chief Executive Officer Josh Schulman said the year marked “a meaningful inflection” for Burberry, citing sequential sales momentum, stronger brand relevance and improved sales quality. He said the company saw particular strength in Greater China and the Americas, both of which delivered double-digit comparable sales growth in the fourth quarter.
“My conviction that our Burberry Forward strategy is the right path to brand relevance and value creation is stronger than ever,” Schulman said.
Comparable Sales Return to Growth
Chief Financial Officer Kate Ferry said comparable retail sales rose 2% for the full year, with momentum building through the year and culminating in a 5% increase in the fourth quarter. Total retail revenue rose 1% at constant exchange rates, reflecting the comparable sales growth and a 1% reduction in space.
Wholesale revenue declined 4% for the year, though Ferry said it grew 3% in the second half, which she described as an encouraging sign of confidence from key wholesale partners. Licensing revenue fell 9%, in line with expectations, due to destocking of older fragrance lines in the first half and longer lead times for licensees to reflect the Burberry Forward strategy.
Total revenue was stable at constant exchange rates and declined 2% on a reported basis.
By region, Greater China rose 4% for the full year and accelerated to 10% comparable growth in the fourth quarter, driven by local spending. The Americas also grew 10% in the fourth quarter, improving from 2% growth in the third quarter. Asia Pacific rose 3% in the fourth quarter and 2% for the full year, while EMEA was flat for the year and declined 2% in the fourth quarter amid weaker tourism.
Ferry said store conversion was strong across regions, helping offset broader industry traffic challenges. In response to an analyst question, she said average unit retail was slightly down for the year, in line with the company’s plan to align pricing with category authority, but had stabilized as the year progressed.
Margins and Cash Flow Improve
Burberry’s gross margin rose 530 basis points at constant exchange rates to 67.9%. Ferry said the improvement was mainly due to one-off inventory reset actions taken in the prior year, along with a higher quality of sales, more full-price selling and lower markdown levels.
Adjusted operating profit increased to GBP 160 million from GBP 26 million a year earlier, while adjusted operating margin expanded to 6.6%. Adjusted earnings per share were GBP 0.152. Adjusting items tied to the cost savings plan totaled GBP 45 million, with around GBP 5 million of additional one-off costs expected in fiscal 2027.
Free cash flow improved to GBP 141 million from GBP 65 million last year. Cash generated from operating activities rose to GBP 582 million, supported by higher adjusted operating profit. Working capital contributed a GBP 41 million inflow, driven primarily by increased payables and lower inventory levels.
Borrowings declined to GBP 511 million from GBP 738 million after the repayment of a maturing GBP 300 million sustainability bond. Net debt to adjusted EBITDA improved to 1.6 times from 2.3 times a year earlier.
Ferry said Burberry remains on track to deliver GBP 100 million of annualized savings by fiscal 2027, with GBP 80 million delivered in fiscal 2026. She said the company had made those savings while continuing to invest for growth, including higher marketing spend.
Outlook Points to Growth but Macro Risks Remain
For fiscal 2027, Ferry said Burberry expects to make further progress toward its financial ambitions, including revenue growth and margin expansion. She cautioned, however, that the company remains mindful of geopolitical and macroeconomic uncertainty and its potential impact on consumer confidence.
Management expects retail space to be broadly stable and wholesale revenue to grow by a mid-single-digit percentage in the first half. Capital expenditure is expected to be approximately GBP 120 million. Currency is expected to be a GBP 10 million headwind to both revenue and adjusted operating profit, while the effective tax rate is expected to be between 27% and 30%.
Ferry said Burberry’s medium-term gross margin target remains 70%, adding that the company is focused on returning to that level gradually. She also said the company intends to reinstate the dividend when ready, though she noted that any such decision would be made by the board.
Brand Strategy Emphasizes Outerwear, Scarves and Younger Customers
Schulman said Burberry’s brand strategy centers on “timeless British luxury” and immersive storytelling that combines heritage and innovation. He highlighted the company’s 170th anniversary campaign, “Portraits of an Icon,” which focused on the Burberry trench coat and featured a group of global figures from film, music, sport and fashion.
According to Schulman, the campaign drove a triple-digit increase in earned engagement versus last year, along with strong double-digit increases in earned media value and press coverage. He also pointed to Burberry’s high summer campaign featuring British actors Simone Ashley and Tom Blyth and a swimwear collaboration with Hunza G, which he said had generated strong sell-throughs and requests from key wholesale accounts for additional stock.
Outerwear and scarves remained standout categories, both growing double digits in the second half, Schulman said. He added that momentum is extending into other areas, with the total accessories category positive for the year and leather goods improving sequentially in the second half.
In Greater China, Schulman said Burberry led regional customer acquisition, supported by strong double-digit growth among Gen Z customers. He said the Burberry scarf had become a social media sensation in China over the past two years and that increased Lunar New Year investment helped support momentum. In the Americas, he cited local activations in New York, Miami, Aspen and Beverly Hills as contributors to the fourth-quarter acceleration.
Schulman also said Burberry is expanding category-focused store concepts, including scarf bars, polo displays, trench destinations and cashmere shops. The company has rolled out more than 200 scarf bars and expects to have nearly 400 category destinations across its store network by fiscal year-end.
Digital, Clienteling and Leadership Updates
Burberry’s e-commerce business grew in the high teens in the fourth quarter, Schulman said, helped by an improved site experience, stronger styling and more engaging storytelling. He said the company is also rolling out new clienteling tools that combine customer segmentation and AI-enabled recommendations for sales associates.
In the Q&A, Schulman said marketing has been an important part of the turnaround and that Burberry has been investing a high-single-digit percentage of sales in marketing. He said that level of investment will continue, supported by other growth levers including product, store productivity and clienteling.
Schulman also said Burberry has begun a two-year renovation of its Castleford factory in Yorkshire, which produces the company’s trench coats. He said the investment will modernize the site and support specialist skills in British manufacturing and craftsmanship.
At the close of the call, Schulman noted that Chair Gerry Murphy will retire at the date of Burberry’s interim results in November. William Jackson will join the board as a non-executive director on July 1, 2026, and will succeed Murphy as chair.
About Burberry Group LON: BRBY
Burberry Group plc, together with its subsidiaries, manufactures, retails, and wholesales luxury goods under the Burberry brand. The company operates in two segments, Retail/Wholesale and Licensing. It provides womenswear, menswear, childrenswear, beauty, eyewear, shoes, and accessories, as well as leather goods, such as bags. The company also licenses third parties to manufacture and distribute products using the Burberry trademarks. It sells its products through Burberry mainline stores, concessions, outlets, digital commerce, Burberry franchisees, department stores, and multi-brand specialty accounts, as well as through Burberry.com website.
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