London's Link and Lace

Comparable sales rose 2 percent, gross margin hit 67.9 percent and the shares still fell more than 5 percent, which tells you what the market was hoping for

Burberry has a habit of making a plain thing look expensive, and its latest annual results are a fair demonstration. For the 52 weeks ended 28 March 2026, the company reported a profit for the year of 21 million pounds, against a loss of 75 million pounds the year before. According to The Impression’s report on the results, adjusted operating profit rose to 160 million pounds from 26 million, and reported operating profit was 115 million pounds, compared with a loss of 3 million a year earlier. The shares nevertheless fell more than 5 percent in London trading. A good result is only good against what people had expected.

The Headline Numbers

Revenue was 2.42 billion pounds, flat at constant exchange rates and down 2 percent at reported rates. Comparable store sales rose 2 percent, reversing a 12 percent decline in the prior year, and the fourth quarter did better still at 5 percent, up from 3 percent in the third. Gross margin reached 67.9 percent, up 530 basis points at constant exchange rates. Free cash flow more than doubled to 141 million pounds. Wholesale revenue fell 4 percent.

Put plainly, Burberry did not sell much more than it did the year before, but it kept far more of each pound it took. That is a turnaround of the margin rather than the volume, and it is the kind of turnaround that depends on cutting costs and charging sensibly, rather than on selling a great many more coats. The company said annualised cost savings had reached 80 million pounds and are expected to rise to 100 million pounds in the next financial year.

Back to the Trench Coat

The strategy is called Burberry Forward, and its core idea is what the company describes as product authority, particularly trench coats and scarves. Outerwear outperformed in all regions, and scarves posted double-digit growth in the second half. Chief executive Joshua Schulman, who joined in 2024 after a career at Coach, has refocused the brand on recognisable categories, recalibrated pricing, simplified assortments and improved store productivity.

It is hard to overstate how traditional this is. A brand built on a gabardine coat designed for rain has found that its future lies in selling gabardine coats to people who want to look as if it might rain. Our own report on London men and the trench coat raised the matter of whether anyone dares sit down in one; the company’s results suggest customers have decided that the answer is not their problem. The check, meanwhile, is quietly back at the centre of the brand, a point our note on the famous check was making in its own way.

Where the Money Came From

Regional performance explains a good deal. Greater China rose 4 percent for the year after a strong second half, and 10 percent in the fourth quarter, helped by local spending and campaigns featuring celebrity ambassadors. The Americas rose 4 percent for the year, with fourth quarter growth accelerating to 10 percent from 2 percent. Asia Pacific rose 2 percent overall, aided by South Korea.

The weak spot was EMEIA, which was flat for the year and down 2 percent in the fourth quarter. The company said softer tourism linked to Middle East tensions weighed on results. It also said the region accounts for about 2 percent of sales, so the effect on the total was small. For a London business, though, the point is worth holding on to: a British luxury brand now earns its living largely from customers who are not in Britain, and tourism that dries up in one region lands in the accounts somewhere else entirely.

What the Chief Executive Said

Schulman described the year in the following terms: ‘This financial year marks a meaningful inflection point for Burberry.’ He added: ‘Our strategy is working, and there are clear opportunities for further growth.’ Those are the words the company reported, and they are the words you would expect from a chief executive presenting a profit after a loss.

The market was less sentimental. Burberry did not give detailed financial targets for fiscal 2027, and that vagueness appears to be what the shares reacted to. The company does expect wholesale to return to mid-single-digit growth in the first half of the new year, and capital expenditure is projected at about 120 million pounds. Shareholders who wanted a promise got a direction instead.

A New Chairman in November

The results also included a change at the top of the board: William Jackson, founder of Bridgepoint Group, will succeed Gerry Murphy as chairman in November. Chairman changes are quiet events in public companies, usually announced alongside good news to soften them. They matter because the chairman is the person who decides how patient the board will be with the plan that Schulman has just described as working.

The London Angle

Burberry is also on the London Fashion Week schedule, listed among the British names returning in the British Fashion Council’s provisional September schedule. That is a useful reminder of the two jobs a heritage brand now does at once: it sells coats to shoppers in Shanghai and Seoul, and it shows up in London to remind everyone where the coat came from. The first job pays the wages. The second job keeps the first one plausible.

It is worth noting where the story does not run. A leather goods brand like Mulberry, whose arrangements we cover in our piece on Mulberry handbags, lives on a different set of numbers, and a comparison of the two would be unfair to both. Burberry is a coat company that has learned to be a scarf company, and its results show it.

What to Watch Next

The things worth following over the coming year are modest and measurable. Does comparable growth hold at the fourth quarter’s 5 percent? Do the 100 million pounds of annual savings arrive? Does wholesale return to growth as promised? And does the new chairman push for the targets the market was missing? None of these requires a new design direction. All of them require a coat that keeps selling.

Readers following the money side of London style will find more in our business and financial coverage, and the wider magazine is at Bohiney Magazine. If you want your finance reading with a little less formality, Newsthump is the sort of place that treats a profit warning with appropriate disrespect. In the meantime, the lesson of the year is simple: when in doubt, sell the coat, and charge for the scarf.

SOURCE: bohiney.com