BURBERRY GROUP PLC (BRBY) Q3 2026 Earnings Call Transcript

Burberry Group plc Q3 FY2 6 Trading Update Wednesday 21 st January 2026

Burberry Joshua Schulman, Chief Executive Officer Kate Ferry, Chief Financial Officer Lauren Wu Leng, VP, Head of Investor Relations

Questions from Antoine Belge , BNP Paribas Thomas Chauvet, Citi Chiara Battistini , J.P. Morgan Carole Madjo, Barclays Grace Smalley, Morgan Stanley Piral Dadhania , RBC Zuzanna Pusz , UBS

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Kate Ferry, Chief Financial Officer Good morning. I am Kate Ferry, CFO of Burberry and with me today is Josh Schulman, our CEO, and Lauren Wu Leng, Head of Investor Relations. There are slides to accompany this call on our corporate website and a transcript will also be available later today. In terms of running order, I’ll go through our performance in the will be happy to take your questions.

third quarter and then Josh and I

Since our last update just a couple of months ago , we have continue d to see positive signals across the business , which provide further proof points that the Burberry Forward strategy is working. For the third quarter, c omparable retail sales gr ew 3% versus last year , a sequential improvement on Q2 . As planned, w e delivered a higher quality of sales across all channels and regions, as we returned to a shorter, shallower and more discreet markdown period versus last year . We saw continued brand momentum with the Outerwear and Festive campaigns, and these were further amplified with activations around the world . We delivered a double -digit improvement in Gen Z cus tomer growth in Greater China and Asia Pacific with growth in younger consumers across all regions . Our hero categories continued to outperform , with scarves and outerwear both up double digits ; and this momentum is now extending into handbags and ready -to-wear . We have also seen a significant improvement in sell -through, driven by a strong customer response to our Spring 26 collection . In stores, we i mproved retail productivity and continued the rollout of our scarf bars, reaching 190 to date with 200 on track by year end. Moving onto the quarter’s retail performance on slide 3. C omparable store sales grew 3% in the quarter. The impact from s pace was flat leading to 3% retail sales growth at constant exchange rates. Currency was a 2% headwind in th e quarter, with retail revenue landing at £ 6 65 m, up 1% at reported exchange rates. We saw full price sales accelerate this quarter, offsetting reduced markdown activity as we returned to a private sale format in stores and online. The shorter, shallower and more discrete markdown period resulted in a margin improvement overall as anticipated. All four regions delivered flat or positive comparable sales for the second consecutive quarter . Traffic continues to be challenging, but conversion and AUR were up in the quarter , reflecting a strong consumer response to our refreshed ranges . Asia Pacific led with the greatest sequential improvement, up +5% from flat in Q2, driven by strong performance in South Korea. South Korea returned to growth at +13%, supported by both local customers and increased tourist spend, particularly from Chinese visitors. Japan grew +2%, in line with Q2, though reduced tourist activity continued to be a headwind. Greater China grew +6%, improving from +3% in Q2, fuelled by local spend. Similar to Q2, Chinese customers outside the region slowed , but local demand offset the decline overall cluster turning positive .

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with the

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EMEIA was flat year -on -year, continuing to be impacted by reduced tourist activity. The Middle East, while a smaller part of the business, showed notable strength both locally and across the region. Americas grew +2%, supported by local spend during the festive period and continued growth in new customers. This was slightly below Q2 due to the higher penetration of markdown activity Q3 last year.

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We began Q3 with the latest instalment of ‘It’s Always Burberry Weather: Postcards from London” and followed this with our festive campaign , which drove strong engagement across our channels Average Instagram reach was up double digits, complemented by strong performance across digital and social platforms in China. Branded search, i.e. customers looking for Burberry on Google, was up double digits globally. This ye ar, we are excited to celebrate our 170th anniversary with a series of innovative campaigns and activations , s tarting with the launch of our Gabardine capsule earlier this month .

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In terms of product, o ur customers are responding to our Timeless British Luxury expression and synchronicity between our runway looks and commercial core , enabling us to reach a broad luxury audience. Building on our strength in outerwear, our stronger assortment of knitwear, trousers, skirts and dresses has giv en customers more ways to wear Burberry head -to-toe , driving momentum in ready -to-wear. We’ve strengthened our foundation in accessories , sequentially improving quarter -on -quarter led by scarves and bags . Half of scarf purchases were personalised, highlighting our customers’ desire for unique pieces anchored in Burberry’s brand codes this festive season. In distribution, w e continued our focus on enhancing the in -store experience through richer displays and cross -category merchandising. We also delivered a series of high -impact festive activations to engage customers globally, from the spectacular Bloomingdales takeover in New York City to an ice -skating rink in Beijing, and finally back home in London with a retail pop -up at the iconic Claridge’s hotel . In addition, our scarf bars continue to outperform and are helping to drive store productivity . Building on this momentum, we're launching more category destinations in the year ahead, including for trench coats and polo shirts. Turning now to the outlook

. As we move into the final quarter of the year, the impact of our

initiatives continues to build, giving us increased confidence in the direction of the business. We expect adjusted operating profit to be in line with consensus for FY26. We are confident th

at we

can build on the progress we’ve made in quality of earnings, continuing to improve performance and driving sustainable long

-term value. And with that, we will now be happy to take your

questions.

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Q&A Operator If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad now. If you would like to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally to confirm that star followed by one to ask a question. Our first question is from Antoine Belge from BNP Paribas . Please go ahead. Antoine Belge, BNP Paribas Yes, good morning. It's

Antoine Belge, BNP Paribas

So two questions, if I may. The first one is about the very good performance of Greater China. So could you maybe comment a bit, into more detail about the Mainland and Hong Kong, et cetera? And so why is it accelerating? Which products are resonating a bit better with that particular customer group? My second question is about the retail productivity. I don't know if you could mention figures or at least some flavour on how it's evolving, especially compared to the more recent period. Thank you very much. Kate Ferry, Chief Financial Officer Morning, Antoine. Perhaps I'll hand over to Josh to chat through some of the products and so on that we're seeing really resonating in China. I mean, I think just on the productivity point, we're not giving any specific targets, but clearly you can see, sales up three percent, flat space, retail productivity is certainly improving. And that really is being driven by all of the initiatives that we highlighted today, whether that's product resonating well, brand, and obviously we highlight specifically initiatives like Scarf Bar and some of the things that you've been seeing happening within the store, but we're not putting a specific number on it. Josh, do you want to tackle the China and product? Joshua Schulman, Chief Executive Officer Sure. So overall, we're very pleased with the Greater China performance, which accelerated in the quarter. And it was really throughout Greater China but led by the Mainland. And , the most important flagship cities were really in the lead. So , strong growth and exactly where we would want it to be. And it reflects, the strong engagement of Gen Z in that market, which is leading us globally. The Gen Z are up double digits, and it was really led on the retail equation in terms of conversion and AUR. And I can say, having visited the region recently and comparing store after store , to my visits last year at the same time, you can just see the difference in the offer, in the physical store

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anchored by a s carf bar, in the more robust visual merchandising highlighting a product range that was really designed for broad universal luxury appeal. So you can see the diversity of customers in the stores attracted to a wider array of products. And so, we were led by outerwear and scarves but now we're seeing the product momentum extend. And in China, the ready -to-wear category led by knitwear, frankly, anything cashmere that we had in the better and best parts of our pyramid were selling. So cashmere coats, cashmere knitwear with the EKD, the equestrian knight design logo, all of those were leading and we’re starting to see really positive sell -throughs on our vintage check handbags, which we had a collection that was trimmed in ruby red, which really resonated with our Chinese customers. All the work that the team has been doing there in terms of locali s ing the marketing with more brand ambassadors. This year, we have four brand ambassadors versus one last year in terms of disruptive activations, like taking over the iconic ice -skating rink at Wangfujing in Beijing. All of those are really working, frankly, to drive engagement of our Chinese customers. Antoine Belge, BNP Paribas Thank you. If I can sneak in just a follow other openings or closure in the quarter?

-up. In China, has there been any store network changes,

Joshua Schulman, Chief Executive Officer Nothing significant.

J ust the normal pace, but nothing significant to announce.

Antoine Belge, BNP Paribas Thank you very much. Operator Thank you . Next question is from Thomas Chauvet from Citigroup. Please go ahead. Thomas Chauvet, Citi Good morning, Josh and Kate. I have two questions, please. The first one, on Korea, you indicated it was a bright spot. Obviously, it's an important market for you. I think the second largest up to China in Asia. What is Burberry -specific versus the broader market? And what are the successful actions you've had there, or even in China, that you can incorporate into other As ian markets, which have been a bit softer in the period, whether Japan or Southeast Asia? That's my first question. And secondly, on wholesale, you've turned your wholesale business in just over 12 months with renewed trust from your key partners and solid revenue guidance for the second half. Can you

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update us on two regions? One, Europe, is the clos ure of smaller European accounts largely over? And with regards to the U.S. department stores, any material exposures to the S aks G lobal situation? And more generally, how do you assess the health of your top four or five U.S. partners at the time? They seem to be increasingly excited to order merchandise from Burberry, but some of them, as we know, are in a relatively fragile financial si tuation. Thank you. Joshua Schulman, Chief Executive Officer Hi, Thomas. I will take both of your questions, which are both really good questions. So, starting in Korea, we couldn't be more delighted with the traction there. Korea is an extremely important market for Burberry. We were one of the first to make Korea a real focus for the local customer there. 20 years ago, Korea was thought of as more of a duty -free market. And I think, several of my predecessors a long time ago really focused on that region for the locals. And what we see there today is that the overall market is improving, but based on our brand position in Korea, we are outperforming a stronger market there. And what we hear is that we're among the top players in the market. And, we’ve really worked in enhancing that relationship between our merchants in the cent re here in London and in our local markets. And I think the work that's been done in Korea is a great example of that in terms of how to phase their outerwear cycle and , to be seasonally appropriate for the different times of the year. And so, we're really seeing the strength led by outerwear and scarves there. But like other parts of the world, we're now also seeing that strength extend to other products as well. Of course , in terms of Korea tourism this quarter, we benefited from double -digit growth, but that was both on the tourist side and on the locals, which is a vast majority of the customers there. You mentioned , the other areas in Asia. You'll remember earlier this year, I guess it's last year at this point, we reorgani s ed our Asia regions around a G reater China region and an Asia Pacific region. So now we have a president who sits in Seoul, but she has a team in Seoul, in Tokyo, and in Southeast Asia and Oceania. And so, you're seeing a lot of the best practices from Korea starting to be implemented across the region. And it's really a terrific team with a mix of local expertise and central guidance. So, we have great people in Singapore and in Japan as well. Moving to your question about wholesale. So, I think it's always important , that we frame wholesale as a relatively small part of our business. It's about 12% of the business. And for us , particularly a brand that is in a transformation, I find being present with the top of line wholesale partners in the world to be really important because that's a place where customers can discover the brand. And , frankly, it's a place where we benchmark ourselves against the competition too. S o, obviously it's a dynamic time in the channel.

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So, Saks Global is a long -term partner of ours. I'm not going to comment specifically on our exposure as part of their restructuring. But I would say it is early days with the new leadership team, but we are confident in the leadership. We're confident in Geoffroy and his team that they will be able to restore Saks Fifth Avenue, Neiman Marcus, and Bergdorf Goodman to their rightful place in the luxury landscape. I would also highlight that Saks Global is a very important customer of ours, but we also have other important customers in the market. D uring this quarter, we were really proud to have our takeover of Bloomingdale's 59th Street in New York City, with the spectacular activation. I don't know if you made it out to New York to see it, Thomas, but if not, you really missed something because we wrapped the facade in 126,000 twinkling lights in the shape of a Burberry scarf, and we had pop -up shops on nearly eve ry floor in the building. And it was truly, truly spectacular. that's the types of activations and the types of reach that you can achieve when you partner with the best wholesale customers in the world.

And

Your last point about Europe , I think that is an ongoing effort and that's dynamic because the small multi -brands evolve and we want to be alongside our luxury peers. And if those accounts no longer have the luxury peers, then we tend to exit them. Thomas Chauvet, Citi Thank you, Josh. Joshua Schulman, Chief Executive Officer Thanks, Thomas. Operator Our next question is from Chiara Battistini, J.P. Morgan

Chiara Battistini, J.P. Morgan

. Please go ahead.

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Thank you very much. Good morning, everyone. I have a couple of questions, please. The first one on the like -for-like, the three percent is that you could provide us with any colour in terms of the split between pricing, volume, and possibly also maybe the mixed effect from shifting from a discount t o full -price sales. And the second question, more on the ready -to-wear and on the handbags and accessories in terms of how to think about the evolution of the product assortment from here in terms of newness versus more activation. Any colour you can give us on the upcoming initiatives on this category specifically, please. Thank you.

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Kate Ferry, Chief Financial Officer Morning, Chiara. Perhaps I'll take the first one on the retail equation and then I'll hand over to Josh on the ready -to-wear and handbags. So, the way to look at the three percent, Chiara, is that traffic, much as you're hearing from others, is still quite challenging everywhere, but we are really, really encouraged by what we're seeing in terms of conversion, so strong conversion everywhere. Custom ers coming in certainly liking what they're seeing. On pricing, so Q3, you're probably not surprised to hear that the AUR was up because, of course, we've reverted to the private sale this year versus a very public sale last year. And I think on pricing more broadly, we've talked to you a lot about our pricing strategy with the Good, Better, Best tiering, and I think I would say that we are seeing that our pricing strategy is really, really working. So, we're seeing good traction both at the top end , we've talked before as soft s , for example, as a good category to showcase this, where we're doing extremely well in some of these high -end cashmere capes, as well as the kind of silk scarf s at the lower end . Likewise in outerwear obviously is heritage is a core category, but within that, for example, the Kensington coat in c ashmere selling really well. So, I think we're very pleased with how pricing is playing out. Josh, do you want to take on th

e product piece ?

Joshua Schulman, Chief Executive Officer On the product piece , I think you actually touched on it somewhat in your answer. As we look at the quarter , the products are really having a broad, universal appeal, and we are very pleased with the traction that we're starting to get beyond the core outerwear and scarf categories. So, in handbags, for instance, we have the good, better, best strategy, and we were really seeing traction at all level s . So, we talked last time about the introduction of the Horseshoe bag, which is an opening price bag. Also , we've had our core vintage check line, which up until this season, it had been a long time since we had provided newness there, and we did the core shapes with a ruby trim and introduced a few new small shapes, and that had a very strong response globall y. And then, in the best category, our B -clip bags, our beautiful suede or leather Cotswolds totes with the iconic hardware, those have also been resonating with customers. Kate touched on our traction in cashmere Kensington trench coats, and now we're seeing that cashmere authority that we have in trench coats and scarves also translate into knitwear, which was a big part of our campaign. You saw in the ‘Twas the Night Before ’ Festive campaign, you saw many people of different generations and different walks of life wearing a cashmere wool Burberry sweater with bold branding of the E questrian K night D esign and the Burberry wordmark, and that was a bestseller across regions. Chiara Battistini, J.P. Morgan

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Okay, thank you very much.

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O perator Our next question is from

Carole Madjo

from Barclays . Please, go ahead.

Carole Madjo, Barclays Hi, yes, good morning. Just a quick question from me , please. Can you share any colour on the exit rate and on current trading? Are you seeing the start of Q4 being broadly in line with Q3, or anything to call out here? Thank you. Kate Ferry, Chief Financial Officer Good morning,

Carol e.

We don't typically comment on how we've traded month by month in the quarter, but I think, fair to say, we were really pleased with how we ended the quarter. And again , we've been really pleased with Q3. I think the shape of Q4, as you know, is going to be very different because, of course, Lunar New Year is a couple of weeks later than it was this time last year. So, I'm not going to comment on current trading, but even if I could, it really is too soon to make a call on it. But as I say, we're really pleased with how Q3 played out. And I think we've got a fantastic Lunar New Year product capsule. We've got some really good campaigns around it as well. And we look forward to updating you in May. Carole Madjo, Barclays Thank you. O perator Our next question is from

Grace Smalley

from Morgan Stanley . Please go ahead.

Grace Smalley, Morgan Stanley Hi, good morning.

Thank you. Sorry for earlier. I was disconnected.

I'll just keep it to one question, as I know we're coming up on time. I just wanted to ask a follow -up on China, please. Thank you for the colour earlier in the call. Based on what you said, it sounds like as if you attribute the improvement both within G reater China but also the Chinese consumer cluster largely to your company specific initiatives. Is that fair? Or what are you also seeing from the Chinese consumer more broadly in terms of macro and market stabilisation? And anything you can share in terms of how different price points are doing within China and whether the aspi rational consumer or there's any trading down from higher price points to more aspirational price points? Thank you very much.

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Kate Ferry, Chief Financial Officer Hi, Grace. I think just to clarify on the cluster, because I know people are always interested in that. Actually, the cluster did turn positive. You'll probably remember it was flat last quarter. The Chinese cluster turned positive. So, we are seeing sequential improvement quarter on quarter there. You'd expect it was slightly behind the region because, of course, you are seeing this slowdown in outbound tourist spend. But as we said before, we're really encouraged by local spend there. In terms of versus the competition? Joshua Schulman, Chief Executive Officer I think traffic remains challenging. But our conversion was really spectacular in China and more broadly, conversion was strong. And I think that speaks to the product offer and the customers are finding more of what they love about Burberry in the stores. And it is easier for our client advisors to fully wardrobe their customers. Grace Smalley, Morgan Stanley Great. Thank you. Operator Thank you and our next question is from

Piral Dadhania

from RBC. Please go ahead.

Piral Dadhania, RBC Morning. So , I just have one. I guess as we approach the end of the Autumn /Winter season, this is the first in which, you guys have had full control over the way in which you've operated as well as the product range. Could you perhaps, Joshua, give us some insights into the learnings that you've had? I think you touched on certain product categories like cashmere working better than perhaps you're expecting. How are you planning and setting the business up for Autumn /Winter 26? And are you planning to be more aggressive in terms of the open -to-buy and the purchase order commitments as you gain confidence in the strategy delivering to plan? Thank you . Joshua Schulman, Chief Executive Officer That is a terrific question because you rightly noted that this was the first festive season that was fully impacted by the Burberry Forward strategy. Last year, we were pulling together the campaign with a product mix that hadn't necessarily been conceived with the Burberry Forward strategy. So the biggest learning is that the strategy is working, that Timeless British luxury is the right brand expression, that aligning our pricing to category authority is working for us, that we have broad universal appeal and need to have Better, Best in each of our categories, and that we also need to lean into our strengths of leading

G ood,

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with outerwear and using scarves as a differentiator, but then fully wardrobing the customer. So, as a merchant, we're always looking at what we can do better and what we didn't get right. And so, one of my favourite meetings of the year is always our festive hindsight review . And we try to do that as quickly as possible after the first day of the year to get together while it's all fresh in our minds. And one of the reflections is we were low on stock in some key classifications. So, Kate mentioned Kensington cashmere trenches. Hard to find in our stores today because we did not anticipate the demand. And so generally you want to keep stock in those in January and February, and we're very broken in sizes. A cat egory like knitwear, it's not something we're famous for. We hero ed it in our campaigns, but we h adn 't invested in the cashmere knitwear in the way that we might have, knowing how successful it would be. And of course, now having this year under our belt, you never want to always look backward. You always want to look forward about what they're going to be wearing next year. We talk about our triangle of design, merchandising, and product development, and they're hard at work now taking these learnings and incorporating them into our plans. And our merchant teams have been traveling around the world, and our design team is upsta irs working on the fashion show. So, lots of work here and lots of learnings to build on the momentum from this quarter . Piral Dadhania, RBC That's great. Thank you very much for the insights. Operator Thank you. Our next question is from

Zuzanna Pusz

from UBS . Please go ahead.

Zuzanna Pusz, UBS Morning, Kate and Josh. Thank you for taking my

question. I just have one.

Sorry, maybe it's a little tricky one because I know it's a revenue call. But I mean, hearing everything, you clearly seem to be enjoying a very strong momentum, especially on the full price front. I'm just wondering because your gross margin outlook for the year seems very conservative. It implies that basically the H2 gross margin would be much lower than H1. So, I guess my question is, is there anything that has changed in the business structurally? Because if I look back, let's say pre -COVID when life was a little bit more normal, I believe that your H2 gross margin was usually actually a little bit higher than H1, or at least as far with H1. So yeah, I guess, especially having such a strong Q3 already in the pocket, I'm just wondering if you could tell us what exactly is behind your thinking on being so conservative on the gross margin for H2. Thank you.

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Kate Ferry, Chief Financial Officer Hi Zuzanna I'll take that one. I think just looking across the piece and what I take from today, as we've said, clearly really pleased with our revenue performance . O n the margin , it is definitely playing out as good as we could have hoped. So certainly, we've talked a lot about margin improvement. We really are seeing that coming through as planned. You're absolutely right that in the past, yes, typically H2 would have been higher than H1. I'm sure in time we will return to that more normali s ed phasing. But as I talked about a lot back in November, the shape this year is still going to be a lower margin in the second half, albeit you're going to see this significant improvement year on year. And we're feeling increasingly confident that we will deliver the margin uplift at least as good as guided for the full year. So, I think wrapping all that up into our outlook, as I say, pleased with the top line margin improvement coming through as planned. We are, however, given the momentum that we're seeing in the business, we're investing more year on year. And you've seen that in our marketing campaigns and therefore reiterating consensus today.

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But what I would say, and just to reiterate some of Josh's comments, all the signals are certainly looking very positive for our longer -term success. Zuzanna Pusz, UBS Thank you. But sorry, so just to clarify, but what exactly, is it tariffs or what is it exactly that sort of is impacting H2 gross margin so much? Kate Ferry, Chief Financial Officer Well, you remember H1 was more around the kind of unwind of the first half in the prior year.

some significant provisioning in

And then of course, this time last year, I mean, we're absolutely competing against that quarter where we were exiting really problematic stock. So, we have the kind of one -off, very public markdown, which we're not repeating again. This year, we have rever ted to a much more normali s ed sale period, private sale, shorter, shallower, more discreet , and therefore, you are going to see that coming through in the margin. So very simply, it's exactly the same as what we took you through back in November. Zuzanna Pusz, UBS Excellent. Thank you.

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Operat or This now concludes our Q&A session for today. I will hand back over to Kate remarks.

Ferry for any closing

Kate Ferry, Chief Financial Officer Thank you. Well look, we'd like to thank you all for joining us this morning, and we look forward to updating you again in May on our progress. END

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