Burberry defies luxury downturn as trench coats and scarves power revival

UK luxury fashion giant Burberry defied a downturn in the industry, thanks to strong sales of its core products. The company's comparable sales rose 4% in the three months to September 26, exceeding analysts' forecasts and outperforming larger rivals like LVMH and Gucci owner Kering. Burberry's adjusted operating profit for the first half of the year reached £62 million, surpassing predictions of £44 million.

China and the US were the key drivers of Burberry's revival. The company reported a 5% rise in comparable sales in China during the second quarter, after a 9% growth in the previous quarter. CEO Joshua Schulman attributed the success to a strategy of offering enduring value and great value for money, which resonates with Chinese customers who are experiencing fatigue with exorbitant pricing.

The Americas, particularly the US, was Burberry's strongest region, with sales up 11% in the second quarter. Bernstein analyst Luca Solca noted that Burberry's overall growth was nearly as strong as Hermes and 9 percentage points better than LVMH's fashion and leather goods division in the same quarter.

Burberry's turnaround plan, initiated by CEO Schulman in 2024, has gained confidence as the brand outperformed the luxury market. The company enlisted British celebrities like Pierce Brosnan and Fiona Shaw for campaigns promoting its signature products - trench coats and scarves. The brand also focused on providing more affordable products to cater to less willing "aspirational" luxury consumers.

Last year, Burberry announced a major restructuring plan to cut nearly a fifth of its workforce, saving £100 million in annual costs by early next year. The company's investor Kernow Asset Management said the turnaround was progressing well, outperforming peers and delivering a fifth consecutive quarter of growth. The next phase of Burberry's revival is expected to be unveiled in March.