Burberry Group (LON:BRBY) reported a sequential improvement in third-quarter trading, with CFO Kate Ferry telling investors the company has “continued to see positive signals across the business,” which she said provide further proof points that the Burberry Forward strategy is working.
For the third quarter, Burberry delivered 3% comparable retail sales growth versus last year, improving from the second quarter. Ferry said the company also executed a “higher quality of sales” as it returned to a shorter, shallower, and more discreet markdown period than the prior year.
Third-quarter performance and regional trends
Ferry said full-price sales accelerated, offsetting reduced markdown activity as Burberry reverted to a private sale format in stores and online. She added that the change in markdown approach supported an overall margin improvement “as anticipated.”
By region, Ferry noted that all four geographic areas delivered flat or positive comparable sales for the second consecutive quarter. She said store traffic remains “challenging,” but conversion and average unit retail (AUR) improved, reflecting what she described as a strong consumer response to refreshed ranges.
- Asia Pacific: Up 5% (from flat in Q2), led by South Korea.
- South Korea: Returned to growth at 13%, supported by local customers and increased tourist spend, “particularly from Chinese visitors.”
- Japan: Up 2%, in line with Q2, with reduced tourist activity continuing to be a headwind.
- Greater China: Up 6% (from 3% in Q2), fueled by local spend; Chinese customers outside the region slowed, but local demand offset the decline.
- EMEIA: Flat year-on-year, impacted by reduced tourist activity; the Middle East showed notable strength.
- Americas: Up 2%, supported by local spend during the festive period and continued new-customer growth; Ferry said growth was slightly below Q2 due to higher markdown penetration in the year-ago quarter.
Brand momentum, campaigns, and customer engagement
Management pointed to continued brand momentum driven by outerwear and festive campaigns, which were amplified through global activations. Ferry said average Instagram reach was up double digits and branded Google search was up double digits globally, with a strong performance across digital and social platforms in China.
As Burberry approaches its 170th anniversary, Ferry said the company is rolling out a series of campaigns and activations, beginning with the launch of a Gabardine Capsule earlier in the month.
In-store initiatives also remained a focus, including the rollout of scarf bars. Ferry said Burberry has reached 190 scarf bars to date and remains on track for 200 by year-end. She added that scarf bars are outperforming and contributing to improved store productivity, with more category “destinations” planned in the year ahead, including trench coats and polo shirts.
Product drivers: from scarves and outerwear to bags and ready-to-wear
Ferry said Burberry’s “hero categories” continued to outperform, with scarves and outerwear both up double digits, and that momentum is extending into handbags and ready-to-wear. She also highlighted a significant improvement in sell-through, driven by customer response to the Spring 2026 collection.
CEO Josh Schulman expanded on product performance in Greater China, saying growth was “really throughout Greater China, but led by the mainland,” and that flagship cities were leading. Schulman attributed progress to strong Gen Z engagement, improved in-store offer, and broader product appeal. He said outerwear and scarves remained key, but in China ready-to-wear was led by knitwear, with strong demand for cashmere items in the “better and best” parts of the product pyramid, including pieces featuring the Equestrian Knight Design (EKD).
On handbags, Schulman cited traction across Burberry’s “good, better, best” strategy, including an opening-price Horseshoe bag, “newness” in the vintage check line with ruby trim and additional small shapes, and higher-end styles such as bee-clip bags and Cotswold totes. He also said a cashmere wool sweater featuring bold EKD and Burberry branding was a bestseller across regions during the festive campaign.
Wholesale and key partners
Asked about wholesale, Schulman emphasized that the channel remains a “relatively small part” of Burberry’s business at about 12% and said it plays an important role in brand discovery and competitive benchmarking.
On Saks Global, Schulman said it is a long-term partner but declined to comment specifically on Burberry’s exposure in relation to restructuring. He said it is “early days” with the new leadership team but expressed confidence that Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman can be restored “to their rightful place in the luxury landscape.” He also highlighted Burberry’s Bloomingdale’s activation in New York City, describing a takeover of Bloomingdale’s 59th Street that included a facade wrapped in “126,000 twinkling lights” in the shape of a Burberry scarf and pop-up shops across multiple floors.
In Europe, Schulman said the rationalization of smaller multi-brand accounts is “an ongoing effort” and remains dynamic, with Burberry tending to exit accounts that no longer sit alongside luxury peers.
Outlook: profit in line with consensus; investment continues
Looking to the final quarter, Ferry said the impact of Burberry’s initiatives is building and management has increased confidence in the business direction. The company expects adjusted operating profit to be in line with consensus for full-year 2026.
On margins, Ferry said the company is seeing margin improvement “as good as we could have hoped” and expects a “significant improvement year on year,” while noting that the second-half gross margin is still expected to be lower than the first half this year. She attributed the phasing to factors previously discussed, including prior-year provisioning unwind and the fact that last year’s period included a “very public markdown” to exit problematic stock—something Burberry is not repeating, having returned to a more normalized private sale period. Ferry added that Burberry is investing more year on year, including in marketing campaigns, while reiterating consensus expectations.
Management declined to comment on current trading in early Q4, citing the shift in timing for Lunar New Year compared to last year, but said it was “really pleased” with how Q3 ended and highlighted an upcoming Lunar New Year capsule and related campaigns.
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.
