Earnings call transcript: Burberry Q1 2025 sees retail sales dip, brand desirability rises

Burberry Group PLC, with a market capitalization of $5.5 billion, reported a slight decline in comparable retail sales for the first quarter of 2025, with a 1% year-over-year drop. The company faced a challenging retail environment, with revenue impacted by currency headwinds and reduced tourist activity. Despite these hurdles, Burberry’s brand desirability improved, and the company remains optimistic about future margin improvements. According to InvestingPro data, the stock has shown remarkable resilience with a 72% gain over the past six months, suggesting investors remain confident in the company’s trajectory.

Key Takeaways

• Comparable retail sales fell by 1% year-over-year.
• Retail revenue reached £433 million, down 6% at reported exchange rates.
• Currency headwinds affected revenue by 4% in the quarter.
• Burberry’s brand desirability increased by 11 points in a Kantar survey.
• The company expects margin improvements for the full year.

Company Performance

Burberry’s performance in Q1 2025 was marked by a slight decline in comparable retail sales and a 6% decrease in retail revenue at reported exchange rates. The company attributed these results to currency headwinds and a reduction in global tourist activity. Despite these challenges, Burberry’s focus on reigniting brand desire appears to be paying off, with a notable increase in brand desirability.

Financial Highlights

• Retail revenue: £433 million, down 6% year-over-year.
• Comparable retail sales: declined by 1% year-over-year.
• Currency headwind: 4% impact on quarterly revenue.

Outlook & Guidance

Burberry anticipates more muted top-line growth in 2026, with a focus on strategic investments in the first half of the year. The company plans to maintain a high single-digit marketing spend and is comfortable with current consensus estimates. Burberry continues to invest in brand and product initiatives to strengthen its market position.

Executive Commentary

CEO Joshua Schulman emphasized the importance of reigniting brand desire, stating, "Reigniting desire for Burberry is our most important initiative this year." CFO Kate Ferry highlighted the company’s commitment to improving margins, saying, "We will deliver margin improvement this year as we build on the early progress we’ve made." Schulman also noted, "We’re seeing a reawakening of the Burberry brand."

Risks and Challenges

• Currency fluctuations could continue to impact revenue.
• Reduced tourist activity may affect sales in key markets.
• The Chinese market presents challenges, with a 5% decline in Greater China and a 4% drop in mainland China.
• Economic pressures in the Asia Pacific region, particularly Japan, which saw a 10% decline.
• The company’s restructuring efforts may face execution risks.

Burberry’s Q1 2025 earnings call highlighted both the challenges and opportunities facing the company. While retail sales have dipped, the company’s strategic initiatives and increased brand desirability offer a positive outlook for future growth.

Full transcript - Burberry Group PLC (BRBY) Q1 2026:

Kate Ferry, CFO, Burberry: Good morning, I’m Kate Ferry, CFO of Burberry, and with me today are Joshua Schulman, our CEO, and Lauren Wu Leng, Head of Investor Relations. As you’ll have seen, we published our Q1 trading update this morning. There are slides to accompany this call on our corporate website, and a transcript will also be available later today. In terms of our running order, I’ll go through our performance in the first quarter, and then Josh and I will be happy to take your questions. Our last update was just a couple of months ago, and we’ve continued to make progress on our Burberry Forward strategy. Our focus this year remains reigniting brand desire as a key requisite to growing the top line. For the first quarter, comparable retail sales declined 1% versus last year, with a sequential improvement in all regions relative to the previous quarter.

During the period, we continued to bring our timeless British luxury brand expression to life through a series of distinctive monthly campaigns: High Summer, Highgrove, and Burberry Festival, each celebrating British summertime traditions. While designed to speak to different customer archetypes, we launched our Autumn 25 collection, the first under the Burberry Forward era, focused on our recognisable brand codes and good, better, best pricing within a luxury context. We’ve continued to enhance visual merchandising and storytelling in stores and online, increasing product density and aligning our category authority. Finally, we initiated the organizational changes announced in May to enhance collaboration and agility whilst progressing delivery of our cost efficiency program. Moving on to the quarter’s retail performance on Slide 3, as mentioned, comparable store sales were down 1% in the quarter. The impact from space was a 1% headwind, leading to 2% lower retail sales at constant exchange rates.

Currency was a 4% headwind in the quarter, with retail revenue landing at £433 million, down 6% at reported exchange rates. Turning now to regional performance, following the organisational changes announced in May, we’ve now transitioned to our new structure comprising four: EMEA, Americas, Greater China, and Asia Pacific. Greater China includes Mainland China, Hong Kong, Macau, and the Taiwan area. Asia Pacific consists of the rest of Asia, including Japan, South Korea, Southeast Asia, Australia, and New Zealand. In Q1, we saw reduced activity by tourists globally, and traffic remained challenged. That said, in Americas we experienced 4% growth supported by new local customer growth. EMEA grew 1% with local spend up mid single digit % which helped to offset the decline in tourist spend. Greater China was 5% lower in the quarter, with mainland China down 4%. Globally, the Chinese customer group performed in line with the region.

Asia Pacific saw a 4% decline driven by Japan, which declined by 10% following a slowdown in tourism. This was partially offset by South Korea as the region returned to growth, up 2%. Moving on to brand initiatives, we kicked off the quarter with our High Summer campaign led by Jack Draper and Rosie Huntington-Whiteley. Featuring Burberry check swimwear shirts and crop jackets, the campaign helped us reach new audiences. Our Highgrove campaign, launched in May, achieved positive engagement across social platforms, supported by our influencer and event strategy to generate local relevance. June saw the launch of Burberry Festival, a series of films and portraits featuring globally recognizable talent alongside our newest brand ambassador, K-pop artist Seung Min, strengthening our appeal across key markets. Collectively, these campaigns boosted brand desirability, the metric most closely tied to purchase intent in terms of product by category.

Outerwear and scarves continued to outperform the group average during the quarter. We’re building on the early success of our check-trim products and the reorders of B clip bags are arriving this summer. We launched our Autumn 25 collection partway through the quarter, the first fully conceived under the Burberry Forward era. This collection represents a strategic step in rebuilding our outerwear core, celebrating recognizable brand signifiers and aligning pricing with category authority. Overall, the collection is off to a promising start with early sell-through results representing a significant improvement from last year’s Autumn collection, both in our directly operated network and wholesale channel. This newfound momentum in wholesale is giving our key partners further confidence in our turnaround. Our goal is to have a smaller, better quality wholesale business going forward.

In stores, we continue to enhance visual merchandising with the reintroduction of mannequins and cross merchandising to inspire our customers to build their wardrobes. This has been brought to life through our Highgrove Garden installations and our festival window displays. We’ve now piloted the first seven scarf bars, which are already outperforming the rest of the fleet in scarf sales. We remain on track to roll out around 200 scarf bars by year end. E-commerce continues to perform strongly with its third quarter of consecutive growth. Turning now to the outlook for full year 2026, we are still in the early stages of our turnaround, and the macroeconomic environment remains uncertain in the first half. We’re continuing to prioritize investment and expect to see the impact of our initiatives build as the year progresses.

We will deliver margin improvement this year as we build on the early progress we’ve made in reigniting brand desire. We remain confident that we are positioning the business for a return to sustainable, profitable growth. With that, we will now be happy to take your question.

Conference Operator: Thank you. If you’d like to ask a question, you may do so by pressing star followed by one on your telephone keypad. If you’d like to withdraw your question, please press star followed by two. When preparing to ask a question, please ensure your phone is unmuted locally. Again, that’s star followed by one to ask a question. Our first question for today comes from Zuzana Push of UBS. Your line is now open. Please go ahead.

Morning everyone. Thank you for taking my questions. I’ll stick to three quick ones, I promise. First of all, would you be able to maybe tell us a little bit about the exit rate or what you’re seeing currently? I know it’s probably not one of your favorite questions, but you’ve seen a very impressive improvement from minus 6% to minus 1%. I would imagine that June was probably better, but it would be interesting to hear more or less what’s been the cadence of growth throughout the quarter. Secondly, would you be able to maybe tell us a little bit more about the growth by consumer cluster specifically? It seems to me like probably most likely the major consumer nationalities such as Americans and Europeans were actually really positive and probably the only drag are the Chinese. If you could confirm that, that would be great.

Finally, you had negative space. It seems like you closed some stores. I know you confirmed the flat space guidance for the full year, but can you tell us a little bit more? What are you doing to the stores? Is it a specific region? I would be most interested to know if you’re basically maybe reshuffling a little bit the mix of your stores and, you know, what is the specific reason for that. Thank you.

Kate Ferry, CFO, Burberry: Morning, Susanna. Thanks for the questions. Perhaps I’ll kick off and I’ve got Josh with me here as well. I’m sure we’ll interject. Let’s start then with the exit rates. You’re right that June was a little better versus the total comp for the quarter. I would just caveat that with it’s very hard to compare year on year. As always, you’ve got kind of comps from the previous year playing here. We’ve got weaker comps in June. I think the most important point to make is that we have actually deliberately rephased some media into June this year as compared with last year to really align our marketing with the festival campaign that’s recently launched. I think combination of comps, more marketing does mean that I’m just mindful of people reading too much into the exit rates.

I’m also going to flag that Q2 is a really important quarter for tourism. Nothing different from what you’re hearing from everywhere else. Tourism is down globally. That said, there’s no doubt we’re really pleased obviously with the quarter on quarter sequential improvement everywhere, which I guess leads into your second question around growth and clusters and what we’re seeing. I think there’s a little bit of a kind of east west story going on here. Better performance in Americas and EMEA, still a bit weaker in Greater China and the rest of Asia. As I said before, sequential improvement everywhere. What we’re seeing is EMEA, obviously that is quite a tourist market. Tourism down but really encouraged by the fact that locals are spending more. Positive performance from our locals there.

Americas obviously much less of a tourist market and I think that is really where we’ve been encouraged by what we’re seeing from customers there. Not only have we got more returning, we’ve also got a good set of new customers in the region. What’s more, these are customers from a broad customer set. We’ve been really focused in that market, a fantastic team, focused on the kind of good, better, best customer acquisition and really taking their lead from some of the brand initiatives that I talked about in the opening remarks. They’ve been leading some good high end events for VIP customers, more the kind of high growth customer. Likewise, they’ve had some great events with DJs in high traffic malls, which has been really leaning into the great success of the Burberry Festival campaign.

I think that’s really what’s been driving the performance in the Americas and then elsewhere. Chinese cluster very much in line with the region. The cluster actually has been similar Q4 to Q1. What you’re seeing is, obviously, tourism piece down but a better local performance. Your final question, sorry to forget that you asked me about space. This is just one quarter, so I wouldn’t really call too much out on space. We’re still very much guiding to space being neutral for the full year. We were down 1% in the quarter. It was just a factor of not having any new store openings, but we did have, I think, four closures. This is really part of BAU, constantly reviewing our network as part of normal course of business, and there’s always a bit of movement in quarter, but I think for the year, nothing to call out.

Our stores are generally in great locations. As I’ve said before, the issue is not so much the number of stores, it’s just really improving the productivity within those stores, which we’re absolutely focused on and seeing good early signs with the Burberry forward strategy.

Conference Operator: Thank you. Our next question comes from Ann Law Bismuth of HSBC. Your line is now open. Please go ahead.

Yes, good morning. I have two questions. The first one is do you confirm the acceleration expected quarter after quarter, and how do you feel about the low single digit to mid single digit improvement expected in H2? Will it be mostly driven by the new collection, or do you have any special initiatives? My second question is about the restructuring plan. Is it almost done, or do you still need a few more months to execute on it? Can you give us an update, and maybe one last question about the performance in Japan and South Korea? Can you give us a bit more clarity about it? Thank you very much.

Kate Ferry, CFO, Burberry: Hi Anne. Thank you. I mean, I think on the question around like for like look forward, you know, I’m probably not going to comment too much. We’re only two weeks into the quarter. I think the key here is obviously that, you know, we’re seeing good green shoots so far in this quarter. This is really about continuing to build on the brand initiatives and most importantly, you know, it’s going to be the product and the change that we’ve made there that really start to feed through. I would just reiterate really what I said back in May. I think you can see the outlook statement is very similar which the focus this year is really about reigniting desire. I think I’ve always said that this year top line growth is going to be more muted.

You’re clearly going to see good margin progression and particularly given some of the inventory initiatives that we undertook last year. This is really, really, as I say, the priority is building on the momentum that we’ve seen in both product and brand. You know, investing in the first half, doing what’s right for the business in terms of investment and then, you know, top line will come. Oh, sorry, restructuring. There was a second and a third question. Apologies. On the restructuring and specifically, I mean if I tackle specifically the cost piece, you know, we obviously announced just eight weeks ago a kind of significant cost initiative, the restructuring program. So far, nothing to call out in terms of how we saw that playing out, the benefit of that will be very much second half weighted and as I say, all going according to plan at this stage.

Just on the regional piece, Japan, again, very similar to what others are seeing, given the currency situation there. Japan is certainly down year on year, but we are encouraged to see that actually Korea is positive. Single digit positive in Korea.

Thank you.

Conference Operator: Thank you. Our next question comes from Antoine Belge of BNP Paribas. Your line is now open. Please go ahead. Yes, good morning again. It’s Antoine at BNP Paribas. Actually, I’ve got three questions. The first one is on the Autumn 25 collection. I think it will be the real first collection with the full impact of what Joshua and his team have been trying to input. In terms of maybe products and signifiers and pricing, could you maybe call out the key elements? My second question relates to the operating profit especially. I think you’ve just mentioned that some of the cost savings would be more H2 weighted. I think the net benefit incremental of the two programs is £56 million. Would it be possible to have a breakdown, maybe H1 versus H2, and overall, what sort of profits could be achieved in H1?

Is it going to be relatively minimal or could we already see a margin going above the 5% mark in the first half? Finally, just in terms of the average AUR, a lot of moving parts, Polo shares maybe going down in terms of pricing, some trench coats going up, maybe price increases to offset tariffs or net. Net, how much was pricing up or down in the first quarter? Thank you.

Kate Ferry, CFO, Burberry: Thank you, Antwan. I’ve got Josh here with me, so I think perhaps, you know, Josh will take the collection piece and we’ll probably build in a pricing discussion into that, and then I’ll talk to you about profit and consensus.

Joshua Schulman, CEO, Burberry: Hi, Antoine. As Kate said, I’ll start with the product. The Autumn 25 collection, as you mentioned, is resonating across all of our customer archetypes globally. What’s notable is that we have a significantly higher sell-through on the Autumn 25 collection this year than we had on the same autumn collection last year. It’s really the product strategies that we’ve discussed that are coming to life and are resonating with our customers. First, leading with outerwear and scarves and earning authority across the other categories. Once again, outerwear and scarves had sequential improvement and comp improvement as well. Outerwear has really been led by light jackets, as you would anticipate for this time of year. Some examples include the Blackpool, that has the continuation, and the Clapton, which have the continuation of the check-trim with a new novelty check-trim zipper that has been a bestseller.

We also talked at the strategy day about uniting our brand signifiers and leaning in to some of our beloved brand signifiers. That includes items with check trims, items with our equestrian knight design. Importantly, we brought back an icon from our heritage, the knight stamp, which appears in many places throughout the collection, including on the Nelson light jacket and this archival knight stamp. It also appears on different jersey pieces and in hardware on our Highlands bags and wherever we have that, that is also resonating with our customers. Finally, aligning our pricing with category authority. Your question on AUR was a good question. I’ll let Kate pick that up. What we’re seeing is we’re seeing strength at all levels of the pyramid, at good, better, and best. Frankly speaking, the Autumn 25 collection is playing out even better than we anticipated.

This is giving our store teams confidence as they’ve been clientelling and calling their customers in. It’s also giving our wholesale customers confidence they are receiving the products. We’re seeing strong growth in the sellout of our wholesale customers as they’re receiving these products, which is giving them further confidence in our turnaround.

Kate Ferry, CFO, Burberry: Hi, Antoine. Just on the profit piece, I mean, I think we’re not really changing the guidance that we gave back in May as per the outlook statement. It is definitely, if you like, a kind of even more H2 weighted than last year in terms of profit because we’re really prioritizing investment in the first half. I think just to give a little bit of color on what we mean, there is that we’ve certainly phased more consumer-facing investment into the first half versus last year. That might be marketing media, also visual merchandising, a bit of clientelling. Just as the example I used in answer to another question in terms of rephasing media even in this quarter to align with the Burberry Festival collection, for example.

I think it’s very much investment in the first half and then we start to see the impact of our actions build into the second half. In terms of H1 consensus, it is for a small profit in the first half, we’re comfortable with that and we’re likewise comfortable with the full year consensus, which I think is million. As per my earlier comments, the priority is really to build on the momentum that we’ve seen in both product and brand. In terms of investment, we’ll continue to do absolutely what’s right for the business. That therefore is a little bit around how much of the cost savings are going to drop through.

This will obviously, as we move through the year, depend a little bit on not only how much we want to invest, there are also macro considerations, tariff considerations, which is why wrapping all of that up, I would say we will be comfortable with consensus. You’re absolutely right. In terms of the cost savings, they will be H2 weighted. Obviously, we announced the transformation back in May and that was the same day that we announced it internally. Obviously, since then we’ve had to go through these processes, which are always tough. It’s always difficult to say goodbye to colleagues. We’ve been managing that since May. We’ve been going through the consultation process in the UK. Obviously, processes differ region to region. It’s only really towards the back end of this month and beyond that colleagues are actually exiting the business. You will see cost savings more H2 weighted.

Conference Operator: Okay, thank you to both of you. Very clear. Thank you. Our next question comes from Grace Smally of Morgan Stanley. Your line is now open. Please go ahead.

Hi, good morning, it’s Grace Smalley. Thank you for taking my questions. The first one would just be on marketing, please. You mentioned that you had kind of several strong marketing campaigns during the quarter and I think increased spend in June in particular. As you look ahead, Josh, what are the sort of things that you’re planning to keep this kind of momentum going on the marketing side and building on these recent strong campaigns that have clearly driven consumer traction. Kate, specifically I think you mentioned that there is more than H1, including more marketing. Could you just detail more precisely the shift in marketing between H1 and H2 and overall what you’re planning for marketing as a percentage of sales for the full year, or whether that’s just going to be a bit flexible, depending on how top line and kind of cost savings progress.

My second question, just to follow up on some of those comments on the wholesale side, appreciate you don’t normally give official wholesale guidance for the second half until November, but just given those comments there on positive feedback from wholesale partners, any sense of how we should be thinking about wholesale growth in the second half relative to that first half, half guidance you’ve given of down mid teens. Thank you very much.

Kate Ferry, CFO, Burberry: Great. Thanks, Grace. I will pass over to Josh to answer the marketing one, and I’m sure you’ll have a few comments on wholesale as well.

Joshua Schulman, CEO, Burberry: Okay, why don’t I take those and then I’ll turn it back to you. Grace, great to speak with you and thanks for acknowledging all of the work that our marketing teams are doing to surprise and delight our existing customers and attract new ones. Clearly you saw in the quarter the drumbeat of timeless British luxury narrative storytelling from High Summer to Highgrove to the Burberry Festival, all with a through line of Britishness and style, but targeted toward different customer archetypes. That led both to the sequential improvement in comp sales, but also to seeing our brand desirability increase by 11 points in our Kantar survey. I don’t want to give away too much. Our marketing team would be upset with me.

What I will say is that you’ll continue to see this type of narrative storytelling with different stories both from town and country, speaking about different British themes. Coming up toward the end of August, we’ll be celebrating the craft around our trenches and we’ll be doing a campaign which was a little bit of a counterpoint to the summer festival. This is about Back to the City and about a more polished form of dressing for coming back to London after a summer of festivals. This week Burberry is in Ibiza taking over the Standard. All good things must come to an end and we have lots of beautiful products to wear coming back to the city for September that we’ll be showing in August. Of course, we’ll be lighting up the beautiful winter fashion show in September, moving into a bold outerwear expression in October.

We go into festive and Lunar New Year. We’re really committed to protecting and amplifying the marketing and consumer-facing spend and reinvesting in the business to drive growth and reignite desire. As Kate said, reigniting desire for Burberry is our most important initiative this year. I think where we’re really seeing this is in the conversion and in the sell-through of the new Autumn 25 collection. This has been a tough moment for tourist travel around the world, but what we’re seeing is bringing people in with these new campaigns and then our conversion is improving significantly. In terms of your question about wholesale, wholesale serves multiple purposes for us from a revenue contribution. It’s a relatively small part of our business, but it’s such a good benchmark of our performance against our peers because, you know, they can buy any product and they’re really responding to their customer demand.

We saw a real turnaround in two things. First, in the sell in from the opinion leading wholesale customers. That started with our winter show sales campaign and from our spring sales campaign in May. The order book was very strong, driven by the most important wholesale customers that we want to grow. In the last, I’d say, 45 days, they now have a critical mass of the autumn collection on the floor and we’re starting to see that their sell out is at the best level it’s been in three years. They are very enthusiastic. I want you to keep in mind though that the wholesale sector is in secular decline.

We will be, and we are still planning for wholesale in general to be a smaller, better quality sector of our business as we continue to exit some of the stores that are no longer appropriate venues for luxury or for our brand. In the accounts that matter to us, we’re seeing the actual end consumer respond to the product, giving the buyers more confidence in our turnaround.

Kate Ferry, CFO, Burberry: Yeah, and I think therefore, you know, wrapping all of those comments up into your specific guidance question, I think H1 guidance remains unchanged, i.e. down mid teens. As usual, we’ll update on the full year in November. As per Josh’s comments, you know, initial Spring Summer 2016 is certainly positive. Just to round all of that off, your specific question on the marketing spend and the shift there, I think the way to look at it is that for the full year we’re still looking at a high single digit % of revenue, which is absolutely in line with previous years. This is much more around phasing across the two halves, which again is why we’re talking about more investment in the first half and a more H2 weighted profit piece for the year.

Okay, very clear. Thank you both.

Conference Operator: Thank you. Our next question comes from Thomas Chauvet from Citi. Your line’s now open. Please go ahead. Good morning, Kate and Josh. Two questions please. The first one on wholesale, follow up on the U.S. that you know well, Josh, there were a few recent negative headlines on the performance of Saks and Neiman Marcus and I think Bergdorf Goodman as well since the merger. I think conversely Nordstrom and Bloomingdale’s seem to have improved or benefited from Saks issues. I mean, is that performance that you’re seeing captured fully in your mid-teens guidance for wholesale in H1? I would assume so. How do you expect this key account to evolve in the second half? On wholesale also, would the European cleanup underway be completely over by the end of fiscal 2026? Secondly, on supply chain and tariffs, I think 70% of your COGS is Euro as of FY2025.

We talked about tariffs with you, Kate, at the full year results a couple of months ago. How’s your thinking evolved in light now of potential 30% tariffs for the EU rather than 20% in terms also on how you think about mitigation actions beyond the obvious, which is usually pricing. Thank you.

Kate Ferry, CFO, Burberry: Thank you. Josh, you probably comment on the U.S. wholesale and I’ll take the tariffs.

Joshua Schulman, CEO, Burberry: Sure. What we’re seeing in U.S. wholesale is really the reawakening of the Burberry brand within all of the accounts that you mentioned within the Saks Global portfolio, with Bergdorf at the top of the pyramid and Saks Fifth Avenue stores and Neiman Marcus stores, in addition to Nordstrom and Bloomingdale’s. We used to have a very important presence in all of those accounts. Over the years that has been diminished. Frankly, just like our directly operated stores, their Burberry business had been very tough these past few years. What’s interesting is with the arrival of the Autumn 25 collection, we’re seeing broad-based strength. We’re seeing it in the women’s ready to wear and men’s ready to wear, but we’re also seeing a growth in handbags and shoes.

This is a great indication for us because here we’re being judged alongside our peers, and the sales associates are choosing to lean into Burberry and the customers are recognizing the work that our teams are doing on the product. Yes, there are a lot of headlines about U.S. wholesale. From our vantage point, we value the partnerships that we have with the team at Saks Global, with Nordstrom, with Bloomingdale’s, all of which are looking to strengthen their Burberry business, and they’re now starting to see some legitimate green shoots. In terms of Europe, the situation is a little bit different. There are a handful of larger important partners that we have, like the Mytheresas and the Net-a-Porters. There we’re also seeing a reawakening of demand for Burberry, which is great. The European wholesale market continues to have a lot of smaller independent stores that are in secular decline.

Every time that we clean them up, there seems to be more to do. It’s ultimately because this is a network that is really built on brand adjacencies. As our co-located brands, the brands that we like to locate with, depart some of these smaller multi-brand stores, they become inappropriate for us to be there and we also close those. My guess is that we will continue to contract the number of accounts in Europe for some time, and hopefully some of that will be offset by growth in the strategic accounts that I just mentioned.

Kate Ferry, CFO, Burberry: To pick up on your tariff question, I think just a reminder, obviously 19% of our revenues are from the U.S., so yes, still certainly a headwind, but 81% of our business is not impacted. As I said in May, we spent much of last year looking at the supply chain, looking at price elasticity. In terms of as much as one can be prepared, we were. You’ll remember, we took quite a surgical approach to price increases in the U.S., and I think the comp shows that we really definitely understood where we had price elasticity there. The situation remains dynamic. If you look over the last few weeks, there have been a number of unofficial announcements, letters sent in the last few weeks. You alluded to the EU reciprocal being increased to 30% from the original 20%.

Of course, there’s also chat about the China reciprocal being kept at 10% permanently. There are many moving parts, some official, some unofficial, and we will continue to monitor and manage as best we can.

Conference Operator: Thank you, Kate. There’s no sort of supply chain reorg opportunity there that goes obviously beyond tariffs. That is in the pipeline. You worked on headcount. Is there a sort of supply chain reorg that could address some of the inefficiency you may face in front of a 20% or 30% U.S. tariff for the next three or four years?

Kate Ferry, CFO, Burberry: I mean, I think there’s nothing kind.

Conference Operator: Of manufacturing in the US or anything more creative.

Kate Ferry, CFO, Burberry: I mean, what I would say is that there’s kind of nothing specific to update you on in that. You know, we work with a global network of suppliers, and we’re always looking at how we can optimize our supply chain, and that doesn’t change. As per my comments, actually over the last year, particularly since Josh arrived, we spent an awful lot of time looking at it. It’s kind of more part of what we do rather than a new reaction to tariffs. I think we’re as much as one can be confident in your ability to mitigate where you can. We’re doing what we can. I think our sourcing has to remain aligned to our expertise and our good, better, best pricing architecture.

Joshua Schulman, CEO, Burberry: I would add one other thing is that in the U.S. in May, we did some surgical price increases in the mid single digits, and as you can see from our comp, we had no impact to that. That has been encouraging for us.

Conference Operator: Thank you. Our next question comes from Louise Singlehurst of Goldman Sachs. The line is now open. Please go ahead.

Morning, Josh. Kate, thank you very much for taking my questions. Just two follow ups for me if I can. Really interested to hear more about. You talked about the new campaigns and new audiences, but just the details around like the customer mix recurring, the newness. There’s obviously a lot of newness. I think you signed the U.S. being particularly exciting on that basis. The second question was just a follow up on the pricing and the alignment which you’ve been talking about across the way. You have authenticity and the category dominance for outerwear, obviously. When we think about the broader product offer and we go into the Autumn 25 collection, is that where we will more noticeably see when we walk into stores about the resetting or the realignment of the pricing or is this step one of many steps to follow over the coming seasons?

Thank you.

Joshua Schulman, CEO, Burberry: Yeah, I’ll take both of those. In terms of the campaign, you can see from the campaigns that we are focusing on different elements of Britishness and then we’re tailoring those to different customer archetypes. In the season, we started off with High Summer with Rosie Whittington-Whiteley and Jack Draper jumping off of a boat in Burberry swimwear. That was fun and targeting a younger audience. We moved to a more sophisticated storytelling capsule and more sophisticated product with the collaboration with Highgrove that targeted an investor customer, and then back to a more youthful version of Britishness celebrating Burberry Festival culture in June. We’re being very deliberate in how we’re pulsing these, and in some ways you may see in the summer months a little bit more focus on reshaping the pyramid of price and some of the good, better, best strategy.

In the summer months, we’re focusing more on the good, naturally, because you have more jersey and T-shirts and polo shirts and you have lightweight jackets that tend to be nylon and opening pricing. As we move into the fall and the winter seasons, our next campaign is going to be Back to the City, which focuses more on beautiful tailoring, more dressed up trench coats for a more elegant.

Kate Ferry, CFO, Burberry: Look.

Joshua Schulman, CEO, Burberry: As we go into winter, you’ll have more outerwear, more cashmeres, more puffers, things like that going into a higher price point again. We’re doing two things at once. We’re rebalancing the cadence of our marketing across our archetypes, and we’re rebalancing the pyramid of product in terms of good, better, best. I think you’ll see how those evolve over this six-month period. We’re really only about two months into that.

Thank you. Very, very clear. Thank you. Just to follow up on the new versus kind of recurring customer, I know it’s always tricky because not everyone’s buying every year from a brand anyway, but in terms of how you would describe the overall cohort, I mean, Josh, when you first started coming in a year ago to today, obviously, presumably the balance is much more geared towards a newer customer coming in. Is that fair?

Frankly speaking, we lost a lot of our existing customers. We were disappointing a lot of our existing customers. What’s great is to see the reactivation of our customer base, which is really, we see that through our conversion and that is happening globally. We are starting to attract new customers, particularly in the Americas and in EMEA with the local customer. I would say that the most challenging part of our business has been in terms of tourists globally.

That’s great to see. Thank you. Thanks.

Conference Operator: Thank you. Our next question comes from Luca Solker from Bernstein. Your line is now open. Please go ahead. Yes, good morning. A question about marketing spend. You said that you’re getting very good signals from conversion and sell-through when it comes to the fall winter collection. Maybe this is a bit simplistic. Isn’t that an indication that consumers are getting into the stores and finding a lot better products than they thought? Could this potentially further enhance if you were spending more on communication going forward? I understand that instead you’re planning to spend less in proportion to what you did in the first half. Maybe I misunderstood. I just wonder whether you would embrace this logic and what you think that the data means in terms of conversion and sell-through improving. The second question relates to the Chinese. There’s a lot of contrasting communications about this consumer nationality.

I wonder if you can help us make any sense of what is going on and if you could draw any distinctions when you look at the Chinese nationals. Are there any differences in trends within China and outside of China or are there any differences in trends when you look at different consumer cohorts or in different regions within China that would help us understand what is potentially to be expected from this nationality going forward? Last but not least, given the very important Forex gyrations we’ve seen in recent months, and especially with the very significant depreciation in the dollar, I wonder if there’s anything new to anticipate and to say about what the Forex impact could be on Burberry Group going forward. Thank you very much indeed.

Joshua Schulman, CEO, Burberry: Hi Luka, it’s Josh. I’ll take the marketing spend and the Chinese customer and then I’ll hand over to Kate for the Forex. You’re absolutely right. Everything you say about what’s happening in terms of customers coming into our stores worldwide and finding product that is more aligned with what they expect or surprised and delighted to see from Burberry is driving the conversion. We’re really pleased with the sell-through improvement and the response that we’re seeing to the marketing campaigns. For the time being, we’re targeting high single digit spend in marketing to continue for the rest of the year. We also want to keep flexibility to test and learn and to reinvest as the year goes on. We’re really looking at that and it’s early days in the turnaround and we’re learning where we should pulse and lean in further.

Of course, Burberry is always weighted toward the second half and having seen the offer for Festive, the offer for Lunar New Year, those are areas where we want to have sufficient marketing firepower to invite a broader audience in to see the evolution of the product. In terms of the Chinese customer.

Kate Ferry, CFO, Burberry: The.

Joshua Schulman, CEO, Burberry: Cluster was largely in line with the region at this time. What we’re basically seeing is that the Chinese customers are shopping more at home, and we’re really seeing the decline in Chinese tourism in other regions around China. Particularly in Japan and within China, we’re seeing the same range of customer archetypes in the quarter. We were really interested to see the growth of Gen Z and younger customers, and now some of that may be because we were really flexing the marketing messages around more youthful expressions of the brand with High Summer and with the Burberry Festival, as you know very well, Kishi is coming up in a few weeks. We also have a specific Valentine’s Day capsule that is targeted toward younger Chinese consumers.

It’s also, within China too, we have the same hierarchy of customer archetypes, and some of the more investment dressing customers who are coming in for beautiful cashmere coats and for items like that tend to shop a little bit later in the year. We’re looking forward to flexing some of the marketing around the more wardrobeing and more cashmere and more lush items as we head out of Chinese Valentine’s Day and into the fall and winter seasons there. We’re anticipating to also get some customers a little bit more mature and higher spending as we go into those periods.

Kate Ferry, CFO, Burberry: Okay. On the FA compared to where we were at the end of FY2025, as you know, the pound has strengthened against all major currencies except, of course, the euro. That’s hence the new guidance today. We’re guiding to £85 million impact on revenue, £15 million on profit. That compares with £55 million revenue and £10 million profit back in May. That was struck. Actually, our latest guidance was struck on the 27th of June. Actually, things have reversed a little since then. As a guide, as we’ve said to you before, broadly, a 5% move in GDP is about a £30 million impact on profit. I think we’ll continue to update you, but I think the guidance today is fair as we sit.

Conference Operator: Thank you very much, Josh and Kate. Thank you. Our next question comes from Charles Scotty from Kepler Cheuvreux. Your line is now open. Please go ahead. Yes, good morning. Thank you very much for taking my questions. I have three. Could you please comment on the comparable store sales growth in the primary DTC channel, that is, excluding outlets? I’m just wondering if, like during the previous quarter, the resiliency has been partly explained by markdowns in outlets. My second question, you commented on the good performance of outerwear and scarves. What about accessories, and more specifically, handbags? Has the price realignment driven renewed traction with customers in this category? The last question is regarding your beauty license. There is some speculation that Coty might divest some of its licenses, with Burberry explicitly mentioned in the press articles.

Would you have any say in the choice of potential acquirer for your beauty license? I’m just curious to hear about how your contract with Coty is structured in the event of a license transfer. Thank you very much.

Kate Ferry, CFO, Burberry: Hi, Charles. Perhaps I’ll kick off and then I know Josh will chip in as well. I think, as you know, we don’t typically break out performance between channels, but our focus is obviously driving productivity and profitability across all our stores. We’re very focused on the full price business whilst also optimizing our outlet channels. I think we’ve got the opportunity actually for higher AURs there. We’ve talked about the opportunity for margin this year and that really is about bringing inventory levels down, shallower discounting, optimizing both full price and outlet channels. I didn’t quite catch, it was a bit difficult to hear, but I think that was the nature of your first question. On the third one, we’ve got a great relationship with Coty.

We’re a key partner for them and, as I say, typically speculate on various rumors there, but from our perspective, they’re a good partner and will remain so. I think the other question.

Joshua Schulman, CEO, Burberry: I think it was on the accessory business, if I’m not mistaken. Is that correct?

Conference Operator: Yes, exactly. Especially handbags. Yes, thank you.

Joshua Schulman, CEO, Burberry: Yeah. When we met a few months ago, we talked about the rebalancing of the accessory business in terms of aligning the pricing with our category authority in a good, better, best spectrum. We talked about the success of our B clip bag, which at the time had largely sold out. Now I’m pleased that the reorders are starting to come in on that bag and that those are working well. In addition, since that time, we’ve launched a couple of other important new lines, including the Cotswolds and the Highlands, all of which cater to different customer archetypes and are priced within a good, better, best range. We’re pleased with those launches. We’ve specifically brought our inventories down significantly in this category to do a reset. The reset is going well.

A pleasant surprise in the quarter has been the acceleration of our shoe category, where we’re really just getting started to rebuild that business. Some of the early bestsellers there have been the Burberry wellies that you see in the Festival collection and more to come on that front.

Conference Operator: Thank you very much. Very helpful. Thank you. This concludes our Q&A session for today. I’ll hand back over to Kate Ferry for any closing remarks.

Kate Ferry, CFO, Burberry: Thank you. Thank you all. We appreciate you joining the call today. Josh and I will look forward to updating you at our interim results in November.

Conference Operator: This now concludes today’s conference call. Thank you all for attending. You may now disconnect your lines.

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