Burberry Group (LON:BRBY) reported higher revenue and adjusted operating profit for the first half of fiscal 2027, as full-price sales and wholesale demand supported its turnaround. Executives said they expected further revenue growth and margin expansion for the full year, while cautioning that the luxury market remained uncertain.
Revenue rose 6% to £1.1 billion at both reported and constant exchange rates, while comparable retail sales increased 4%. Adjusted operating profit climbed to £62 million from £19 million a year earlier, Chief Financial Officer Kate Ferry said.
Chief Executive Officer Josh Schulman said Burberry had recorded five consecutive quarters of positive comparable retail sales and that its Burberry Forward strategy was helping the brand compete in a challenging market.
Americas leads regional growth
The Americas was Burberry’s strongest region, with comparable retail sales up 12% in the first half and 11% in the second quarter. Ferry attributed the performance to local customer engagement and strong conversion in stores.
Greater China grew 7% in the half and 5% in the second quarter, supported by local spending and tourism within the region. Asia Pacific grew 3% in both periods, with South Korea up 12% in the half. Japan declined 1% in the second quarter, although that was an improvement on the first quarter.
Europe, the Middle East, India and Africa declined 2% in both the half and the second quarter. Ferry cited reduced tourist activity and weak traffic, particularly at outlets. Schulman said sales to local customers in the region were rising, but tourist spending was a challenge as more Chinese and Middle Eastern customers shopped closer to home.
Wholesale revenue rose 17% at constant exchange rates, ahead of guidance, as partners reordered products during the season. Licensing revenue fell 5%.
Margins improve as costs stay flat
Adjusted operating margin expanded 390 basis points at constant exchange rates to 5.7%. Adjusted net operating expenses were flat, as cost savings offset inflation and the timing of marketing expenditure, Ferry said.
Gross margin improved 40 basis points, supported by full-price sales and a one-off supply chain rebate, partially offset by inventory provisioning and the stronger performance of wholesale. Excluding the one-off item, underlying gross margin was 67.8%, down approximately 10 basis points. Ferry said the company continued to expect gross margin expansion in the second half and for the full year.
Burberry generated £50 million in cash from operating activities but recorded a £147 million free cash outflow, reflecting a working-capital outflow as it built inventory ahead of the peak selling season. Leverage improved to 1.7 times from 2.2 times a year earlier.
The company expects its cost efficiency program to deliver £100 million in annualized savings in fiscal 2027 and remains committed to keeping operating expenses flat for the year. Ferry said Burberry was comfortable with the range of analysts’ full-year consensus estimates and the midpoint, while noting that the festive trading period was still ahead.
Outerwear and leather goods drive product momentum
Schulman said outerwear grew by double digits in the first half, while womenswear, menswear, accessories and childrenswear all grew. Leather goods also contributed, led by the women’s House Check and Cotswolds handbag ranges.
Burberry’s customer base grew during the half, driven by existing customers returning to the brand, Schulman said. He added that the number of Gen Z customers increased by double digits globally, particularly in China.
The company plans to restore its Regent Street flagship as Burberry House and open a flagship on Milan’s Via Montenapoleone next year. Schulman said overall retail space was expected to remain broadly flat, with some openings and closures, while the company seeks to improve store productivity.
Burberry will provide a further strategic update at a capital markets day in March. Schulman also said Gerry Murphy was stepping down as chair and welcomed William Jackson to the role.
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.
