Burberry’s third-quarter sales were better than expected, indicating that the company is on the road to recovery amid a cost-cutting plan and strategic overhaul.
The troubled British trenchcoat maker struggled for much of the last three years to lure in shoppers as the luxury sector reeled from a pull-back in spending. That dragged Burberry out of the FTSE100 and caused its shares to nosedive.
But green shoots are finally emerging. Burberry’s third quarter, during which the company launched new campaigns to tweak its appeal to luxury buyers, showed a softer drop and stronger growth in the U.S.
Burberry’s comparable retail sales between October and December were down only 4% compared to analyst forecasts of 13%. Year-over-year revenue was down 7% to £659 million, while Asia Pacific store sales were down 9%—an improvement from Q2’s 28% decline.
Still, the better-than-expected results sent the British company’s shares up as much as 15% higher during Friday morning trading in London.
The London-headquartered luxury brand kicked off the “Burberry Forward” program in November to double down on the brand’s heritage and strong suit, particularly in outerwear. As part of the new pivot, Burberry partnered with A-list celebrities like Olivia Colman and Cole Palmer.
It also built out its range of scarves, one of Burberry’s products carrying its signature check that appeals to entry-level luxury shoppers. CFO Kate Ferry noted that those efforts drove Google search results for Burberry scarves to their highest in three years.
“Our focus in this next phase is on reconnecting the brand with its original purpose, leveraging our strengths with a disciplined approach, and offering a range of products to attract a broad base of luxury customers,” Ferry said during the earnings presentation on Friday.
Burberry is attempting to course-correct after its “elevated” pricing strategy backfired by pricing consumers out. This was set against a backdrop of the luxury sector’s biggest players struggling to gain wallet share amid high interest rates.
The company was also dealing with its own battles. It was fading in relevance, experiencing many key leadership changes in a short span of time, and straying too far away from its core: mid-range luxury goods and outerwear products.
Now, the 169-year-old company has established a “good, better, best” pricing structure to offer luxury options at various price points, catering to a wider pool of shoppers.
Ferry also said Burberry’s overhaul was well-received during the festive period—typically a big shopping period of the broader retail category.
The U.S., in particular, performed well while sales in Europe and Middle East were flat, and Asia (excluding Japan) remained weak.
Burberry’s results underscore the luxury sector’s recovery after being battered for a few years. Richemont, the Swiss company behind Cartier and Chloé, set the precedent by reporting strong results last week.
While the sector may collectively be turning a corner, Burberry’s strategic shift is still in its early days.
“Overall, investors have become more positive on Luxury post Richemont and Burberry has seen a reversal in sentiment although many are still uncertain of the recovery plan,” Deutsche Bank analysts led by Adam Cochrane wrote in a note Friday.
Burberry said it was “more likely” to break even in the second-half of its 2025 financial year, offsetting the operating losses of the first-half.
“The acceleration of our core categories reinforces our belief that Burberry has the most
opportunity where we have the most authenticity and that our strategic plan will deliver sustainable, profitable growth over time,” CEO Joshua Schulman said. “However, we recognise that it is still very early in our transformation and there remains much to do.”
