Burberry hopes for boost from its bet on British
Burberry approaches its crucial full-year results amid a drastic turnaround. Felix Armstrong unpacks what analysts and investors will be expecting from the FTSE 100 fashion house
Is there anything more British than Olivia Colman serving fish and chips? The minds behind Burberry’s turnaround – and a recent ad campaign starring the actress – will be hoping not, as the FTSE 100 fashion house gears up for its full-year results on Thursday.
The British luxury powerhouse, famed for its iconic mackintosh, will hope to deliver the first real evidence of this revamp, as it pivots away from a “dead end” foray into ultra-high fashion and towards a focus on “timeless British luxury”.
Burberry’s update comes almost a year to the day after it announced swingeing cuts in a bid to find £60m in savings. The luxury brand responded to a £66m loss with around 1,700 job cuts and a plan to remove the entire night shift at its Yorkshire raincoat factory.
The savings came on top of another £40m cost-cutting programme that had been announced only a few months before, in November 2024, and was welcomed by a 17 per cent jump in the fashion house’s share price.
This time last year, chief executive Joshua Schulman said he “couldn’t be happier with the progress” being made by his team, hailing a six per cent drop in underlying sales in the final quarter – improved from the 15 per cent full-year drop – as signs of improvement.
‘Fast fashion’ approach to hiring
Schulman will hope to provide far more solid indicators of progress on Thursday. Burberry’s turnaround came after a series of misguided attempts to revive the brand which saw the fashion house burn through a series of designers, as it briefly forayed into top-end fashion and designer bags.
“So far this decade it feels like Burberry has been discarding CEOs and creative directors with all the abandon of an influencer steeped in fast fashion rather than the heritage name in British luxury it has historically been,” said Dan Coatsworth, head of markets at AJ Bell.
Burberry’s share price tumbled from its April 2023 peak, down as much as 55 per cent lower than this zenith. But the stock has begun a recovery, gaining about 19 per cent in the past year.
Executive and creative stability will be key to demonstrating meaningful progress, analysts say. Burberry appointed Schulman in July 2024 and has held on to its chief creative officer, Daniel Lee, since 2022. Previously, Lee led the resurgence of Milan-based luxury fashion house Bottega Veneta.
Burberry’s last update in January saw the fashion house parade its fifth consecutive quarter of growth, as group sales increased by three per cent in this three month period, compared with a four per cent drop at the same time the year prior. Revenue jumped by one per cent to £665m.
China’s youth a key market
Analysts say the luxury brand will need to recapture two key markets – China and Gen-Z – if its turnaround is to succeed. Burberry boasted six per cent sales growth in the Greater China region in its January update, doubling its progress from the previous quarter.
The firm also saw sales jump in the wider Asia region, including a 13 per cent rebound in South Korea which it said was largely driven by Chinese tourism. Burberry said it also saw double-digit growth in Gen-Z customers in the Greater China and Asia Pacific regions, “and further strengthening reach with younger consumers across all regions”.
“Recovering demand in North America and China and a tighter rein on costs have been supportive to Burberry in recent months. Investors will be keen to learn if that progress is being maintained when it reports its full-year results,” Coatsworth said.
But Burberry has also been hit by European tariffs imposed by the US, dragging down some of the fashion house’s resurgence in other areas. The various share-price jumps enjoyed by the fashion firm following tariff loosenings lays bare the extent to which its fate is intertwined with the whims of the US President.
Cole Palmer: Burberry’s hail mary
The fashion house’s balance sheet turnaround has been led by its “Burberry Forward” creative strategy, which has seen the brand lean back into scarves and trench coats as it aims to exude “timeless British luxury”.
Burberry has enlisted a cast of British celebrities to lead its campaigns since Schulman’s appointment, including Oscar-winning actress Olivia Colman, rapper Little Simz and Premier League footballers Cole Palmer and Eberechi Eze.
Richard Hunter, head of markets at Interactive Investor, said the fashion house’s shift towards traditional British imagery has begun to pay off.
“Burberry fully recognises that the transformation is still in its early stages and, at the same time, a brand which had moved away from its traditional British traits of heritage and innovation, which had such appeal to overseas buyers and particularly tourists with an aspirational and stylish look, still needs to be re-established,” he said.
If Burberry is to inspire confidence in its investors, it will need to deliver on consensus expectations of £2.4bn in revenue, 20p per share earnings and a pre-tax profit of around £88m.