Burberry Q1 FY26 presentation: Sales decline narrows as turnaround takes shape

Introduction & Market Context

Burberry Group (OTC:BURBY) PLC (LSE:BRBY) presented its Q1 FY26 results on July 18, 2025, revealing early signs of a turnaround strategy taking effect despite ongoing sales challenges. The British luxury fashion house reported a 1% decrease in comparable retail sales compared to the previous year, with total retail revenue declining by 2% at constant exchange rates (CER) and 6% as reported.

The results come as Burberry (LON:BRBY) continues to reposition itself around its "Timeless British Luxury" brand expression, implementing organizational changes to foster greater collaboration and agility across the company. These efforts are part of a broader strategy to revitalize the iconic British brand amid shifting luxury market dynamics.

Quarterly Performance Highlights

Burberry’s Q1 FY26 retail revenue reached £433 million, down from £458 million in the same period last year. The 6% reported decline reflects both a 1% comparable sales decrease and a significant 4% negative impact from foreign exchange movements.

As shown in the following chart of quarterly retail sales growth and regional performance:

Despite the overall decline, the company emphasized that all regions showed sequential improvement compared to the previous quarter, suggesting that recovery efforts may be gaining traction. The retail space impact was -1%, indicating a slight reduction in the company’s physical footprint.

Regional Performance Analysis

Regional performance varied significantly across Burberry’s markets, with the Americas and EMEIA (Europe, Middle East, India, and Africa) showing growth while Asian markets continued to struggle.

The Americas region led with 4% comparable sales growth, followed by EMEIA at 1%. However, Greater China and Asia Pacific remained challenging, posting declines of 5% and 4% respectively. The Greater China region, which includes Mainland China, Hong Kong, Macau, and Taiwan, represents 30% of Burberry’s total retail sales, making its performance particularly significant for the company’s overall results.

The regional breakdown reveals Burberry’s global sales distribution:

This performance reflects ongoing challenges in the luxury market, particularly in China where economic concerns and shifting consumer preferences have impacted Western luxury brands. The positive growth in the Americas suggests the brand may be regaining traction in this important market.

Strategic Initiatives

Burberry highlighted several strategic initiatives aimed at reinforcing its brand positioning and improving operational efficiency. The company has been implementing monthly campaigns to strengthen its "Timeless British Luxury" expression, including High Summer, Highgrove X Burberry, and Burberry Festival campaigns.

The company’s product strategy includes a rebalanced Autumn 25 collection, with continued emphasis on its core strength categories: outerwear, ready-to-wear, bags, and shoes. These product initiatives are showcased in the following brand and product highlights:

In-store and online experiences have also been enhanced with improved visual merchandising and storytelling. The company’s distribution strategy focuses on creating immersive retail environments that communicate the brand’s luxury positioning:

Forward-Looking Statements

Looking ahead, Burberry acknowledged it is in the "early stages of our turnaround," focusing on reigniting brand desire and improving margins to drive sustainable, profitable growth. The company provided specific financial guidance for FY26:

Key elements of the outlook include:

• Retail space expected to remain broadly stable in FY26
• Wholesale revenue projected to decline by around mid-teens percentage in H1 FY26
• Annualized cost savings of £80 million expected in FY26, with £24 million already delivered in FY25
• Restructuring charges of approximately £50 million anticipated in FY26
• Foreign exchange movements expected to create headwinds of approximately £85 million on revenue and £15 million on adjusted operating profit
• Capital expenditure projected at around £130 million

The company’s focus on cost savings and operational efficiency suggests a strategic pivot toward improving profitability while rebuilding brand equity in a challenging luxury market environment.

Burberry’s presentation indicates a company in transition, with mixed regional performance but signs of sequential improvement. The emphasis on brand repositioning and cost efficiency measures reflects a balanced approach to addressing both top-line growth challenges and bottom-line performance as the company navigates its turnaround journey.

Full presentation:

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