Burberry Group Q1 Earnings Call Highlights

Key Points

• Burberry posted its fourth straight quarter of positive comparable sales, with Q1 comparable retail sales up 5% and revenue rising to GBP 455 million. Growth was led by the Americas and Greater China, while outerwear, scarves and women’s bags were standout categories.
• Management said the Burberry Forward strategy is gaining traction, noting improvements across all four divisions — womenswear, menswear, accessories and childrenswear — plus stronger marketing and store initiatives. E-commerce also grew in the mid-teens, and the company raised its first-half wholesale outlook to high single-digit growth.
• Burberry kept its full-year outlook intact despite macro uncertainty, saying it remains comfortable with consensus operating profit expectations and expects further revenue growth and margin expansion. The company also reiterated cost-saving and capex plans for fiscal 2027, while warning that geopolitical and consumer-demand risks remain.

Burberry Group LON: BRBY reported a 5% increase in comparable retail sales for its fiscal first quarter, with Chief Financial Officer Kate Ferry saying the luxury fashion company continued to make progress under its Burberry Forward strategy.

Retail revenue rose 5% at reported exchange rates to GBP 455 million. Ferry said retail sales grew 4% at constant exchange rates, with a 1% headwind from space and a 1% tailwind from currency.

The quarter was led by strength in the Americas and Greater China, while Burberry also cited broad-based category improvement. Ferry said outerwear grew by double digits, supported by demand for heritage rainwear, lightweight jackets and seasonal products. She added that the company was encouraged by the performance of silk scarves and said Burberry saw growth across womenswear, menswear, accessories and childrenswear for the first time in three years.

Americas and Greater China Lead Regional Growth

The Americas delivered the strongest regional performance, with comparable retail sales up 12%. Ferry said growth was supported by local spending and broad-based customer acquisition, adding that Mother's Day was “particularly successful” in the region and helped drive engagement and growth in bags.

Greater China comparable retail sales rose 9%, supported by local spending and strong growth in Gen Z customers. Ferry said the operating environment in China remains mixed, but that Burberry’s actions are “driving outperformance.”

Asia Pacific grew 3%, with South Korea up 11% on what Ferry described as a more challenging comparative base. Japan declined 2%, which the company attributed to continued weakness in inbound tourism from Chinese visitors.

EMEIA declined 3%, reflecting the impact of the Middle East conflict and lower tourist spending. Ferry said tourism in Europe was affected by the conflict, though the company saw “good trends from American visitors” and encouraging full-price sales. Excluding the Middle East, the region declined 1%.

Product Strategy Drives Category Gains

Chief Executive Officer Josh Schulman said the quarter marked Burberry’s fourth consecutive quarter of positive comparable sales and showed evidence that the company’s strategy is working.

“This was our first print where we had women's, men's, accessories, and children's wear, all four of our divisions, positive comping together,” Schulman said.

Schulman said Burberry has focused on leading with outerwear and scarves while addressing seasonality through lighter-weight products. He cited strong sales of the Tropical Gabardine range, shorter trench styles such as the Mayfair jacket and lightweight nylon jackets.

In scarves, Schulman said Burberry has been extending its authority beyond cashmere into silk scarves, which he described as a highlight of the quarter. He also pointed to stronger summer categories, including swimwear, where he said the Hunza G collaboration helped double the swimwear business for women and men.

Burberry also reported strong performance in knitwear, polos and women’s bags. Schulman said women’s handbags are becoming a more meaningful part of the business, supported by growth across families including Cotswolds, House Check and Horseshoe. He said handbags saw double-digit growth in the Americas around Mother’s Day and are attracting new customers to the brand.

Ferry said the company’s “good, better, best” pricing strategy is supporting quality of sales through higher full-price growth and lower markdowns year over year. She said Gen Z customers increased by double digits for the group.

Marketing and Store Initiatives Support Brand Momentum

Burberry said marketing investments helped sustain brand momentum during the quarter. Ferry said the Portraits of an Icon campaign brought new customers to the brand, with a 19% increase in new rainwear customers. She also cited A Good Sport as supporting growth in House Check bags and polos.

The company also highlighted local brand activity, including a short documentary series with Chinese National Geography featuring brand ambassador Chen Kun exploring China’s landscapes in Burberry outerwear. Burberry also staged hotel takeovers in Antibes, Bangkok and Athens to support its High Summer campaign and swimwear collection.

Schulman said the company plans further initiatives during the year, including a special trench display at the Victoria and Albert Museum in London and a large-scale exhibition in Shanghai to conclude Burberry’s 170th anniversary year.

On distribution, Ferry said Burberry continues to adjust its store network and is investing in a new location on Via Monte Napoleone in Milan, expected to open in fiscal 2028. The company launched 97 polo galleries by Father’s Day and plans trench destinations and cashmere shops in the second half of the year.

Schulman said category destinations such as scarf bars and polo galleries are improving store productivity. Ferry added that comparable sales growth alongside slightly lower space indicated a positive trajectory in store productivity.

Wholesale Outlook Raised, E-Commerce Grows

Burberry raised its first-half fiscal 2027 wholesale outlook, now expecting revenue to grow by a high single-digit percentage, compared with prior guidance for mid-single-digit growth. Schulman said wholesale partners are responding positively to Burberry’s strategy and product newness.

“Our wholesale partners can buy any luxury brand, and they have been voting for Burberry with their open to buy,” Schulman said.

He said the wholesale order book improved across regions, including the Americas, where Burberry expects to be in fewer doors but with stronger quality of sales. He also cited partnerships with China Duty Free Group, Central Group and LuxExperience.

E-commerce grew by a mid-teens percentage in the quarter. Schulman said the channel represents high single digits of sales and has now grown for eight consecutive quarters. He said e-commerce is particularly strong in the Americas and is bringing in younger customers, supported by improved personalization, styling and digital category storytelling.

Guidance Maintained as Management Flags Macro Uncertainty

Ferry said Burberry expects to make further progress in fiscal 2027, including revenue growth and margin expansion in line with expectations. She said the company remains mindful of geopolitical and macroeconomic uncertainty and the potential impact on consumer confidence.

For fiscal 2027, Burberry expects retail space to be broadly stable, annualized cost savings to reach GBP 100 million and capital expenditure of approximately GBP 120 million. Ferry said GBP 80 million of the cost savings were delivered in fiscal 2026. Restructuring charges are expected to be around GBP 5 million.

Based on June 26 spot rates, currency is expected to provide an approximately GBP 20 million revenue tailwind and have a broadly neutral impact on adjusted operating profit. The company continues to expect an adjusted effective tax rate of 27% to 30%.

Asked about margin phasing, Ferry said Burberry expects another year of gross margin expansion, but noted that first-half gross margin may be down slightly year over year as the business returns to more normalized seasonal patterns. She said the issue was not increased discounting and added that Burberry is comfortable with its inventory position.

Ferry said the company remains comfortable with consensus adjusted operating profit of GBP 246 million, while emphasizing that it is still early in the fiscal year. She also said there was “absolutely no downgrade” to the outlook.

“As we move through the year, we remain confident that we can build on the progress we have made in quality of sales, continue to improve performance, and drive sustainable long-term value,” Ferry said.

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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