Burberry (LON:BRBY) shares rallied on Friday after the struggling British luxury brand reported a slower sales decline in its latest update.
The company’s retail revenue fell by 5.5% year-on-year to £433 million in the first quarter but that marks an improvement from recent quarters where sales had slumped far more sharply. On a constant currency basis, the drop was a milder 2%.
Comparable store sales were down just 1%, much better than the 6% fall in the prior quarter and comfortably ahead of analyst expectations, who had pencilled in a steeper drop. It’s the first sign in a while that Burberry’s overhaul might be starting to gain traction.
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Regionally, the Americas turned positive with a 5% gain, while Europe, the Middle East, India and Africa (EMEIA) managed to scrape out a 1% increase, helped by stronger local spending. The picture was gloomier in Asia, with comparable sales down 5% in Greater China and 4% across the wider Asia Pacific region.
Burberry’s management is under no illusions, this is just the start of what they call a “turnaround” year. The company’s brand overhaul, dubbed ‘Burberry Forward,’ is still bedding in. Cost cuts are also on the agenda, with a target of £100 million in total savings by 2027 and up to 1,700 job losses in the pipeline.
CEO Joshua Schulman, a year into the job, believes recent product launches are beginning to reconnect with luxury customers. Early feedback on the Autumn 2025 collection is said to be positive, with Burberry leaning heavily on its traditional strengths, outerwear and scarves, to drive appeal.
Investors seemed to like the progress, sending shares up 4% in morning trading. Still, the company remains cautious. Tourist spending is softening, especially in Europe, and conditions in China remain tricky.
The Burberry turnaround is very much in its opening chapters, but the worst of the sales collapse may be in the rear-view mirror. The next big test will be whether fresh collections can tempt shoppers back and stabilise revenue through the rest of the year.