Burberry Exceeds Holiday Sales Forecasts, Gains Shoppers in China

• Q3 revenue reached 665 million pounds, with comparable store sales up 3%, beating the 2% analyst consensus forecast
• China sales rose 6% on a comparable basis, with 'double-digit' growth in Gen Z customers driving recovery in the key luxury market
• The company did less discounting than the previous year with a shorter and 'shallower' markdown period, indicating stronger full-price demand, and expects full-year adjusted operating profit of 149 million pounds

Burberry Exceeds Holiday Sales Forecasts, Gains Shoppers in China

Key Financial Results:

Burberry reported Q3 revenue of £665 million for the three months ending December 27, with comparable store sales rising 3%—exceeding analyst expectations of 2% growth. The company reaffirmed its full-year adjusted operating profit forecast of £149 million ($200 million), in line with consensus estimates.

Turnaround Strategy:

CEO Joshua Schulman, who took the helm in July 2024 amid declining sales, is leading a turnaround focused on core products including trench coats, scarves, and British heritage positioning. The strategy involved a 20% workforce reduction last year as part of cost-cutting measures. Marketing campaigns featuring British celebrities and "Timeless British Luxury" messaging resonated with customers.

China Recovery and Gen Z Growth:

China emerged as a bright spot with 6% comparable sales growth, driven by "double-digit" increases in Gen Z customer acquisition. The Greater China and Asia-Pacific regions showed particularly strong performance in this demographic.

Margin Improvement:

Burberry executed a shorter and "shallower" markdown period compared to the previous year, signaling improved pricing power and customer willingness to purchase at full price—a positive indicator for brand health and profitability.

Category Performance:

Growth extended beyond the company's traditional strength in outerwear, with accessories and ready-to-wear categories also showing momentum.

Market Implications:

The results suggest Burberry's repositioning strategy is gaining traction in the challenging luxury market, particularly in China where many luxury brands have struggled. The reduced discounting and Gen Z appeal indicate potential for sustained recovery and margin expansion.