Burberry turnaround tempered by Iran war impact
- By Reuters -
- May 15, 2026
UK fashion house Burberry met quarterly sales expectations on Thursday, but its shares slid as weaker revenue in Europe and the Middle East due to the Iran war tempered investor optimism about the pace of its turnaround.
The luxury brand posted a 10% rise in its fourth-quarter sales in the Americas and China after a marketing blitz aimed at attracting more Gen Z consumers while sales in the combined Europe, Middle East, India and Africa (EMEIA) region fell 2%.
Overall group sales grew 5%, in line with forecasts.
Burberry’s shares were down 6.5% by 1230 GMT, bringing the stock’s losses so far this year to 14%.
“Investors were spooked by a weaker performance in the Middle East and Europe,” said Dan Coatsworth, head of markets at AJ Bell, though he added the wider turnaround plan looked to be paying off.
Sector leader LVMH’s shares were up slightly on Thursday but are down 28% since January 1, as a hit to global travel and surging costs have dashed hopes of a broader recovery for the $400 billion luxury goods market this year, squeezing profits and deepening a post-pandemic boom and bust.
INROADS WITH GEN Z SHOPPERS
Burberry CEO Joshua Schulman has been steering its transformation since taking over in July 2024, focusing on trench coats and scarves and by reinforcing the 170-year-old brand’s heritage with younger shoppers, while cutting costs to undo years of underperformance.
“We’re seeing broad excitement about the brand,” said Schulman, an American who previously led Coach and Michael Kors, adding that the group had connected strongly with Gen Z shoppers.
In a presentation to investors, Schulman said Burberry was improving its operations, including renovating its trench coat factory in Northern England to meet rising demand, while keeping tight control of inventory.
He said Burberry will continue to sharpen focus on how it prices items to “drive value for money in a luxury context”.
Investors are divided over how solid Burberry’s turnaround is and whether initial signs of success will translate into long-term growth, especially as higher energy prices erode middle class consumers’ willingness to spend on clothes and bags.
Echoing comments by other luxury brands, finance chief Kate Ferry said footfall in stores was challenging, but added she was pleased about the number of in-store purchases as the company aims to return to annual sales of 3 billion pounds ($4.1 billion) and higher.
JPMorgan analysts said in a note that Burberry’s results were “good, but maybe not good enough”, adding that some may view the company’s pace of recovery in China as not fast enough, alongside a muted showing in EMEIA and Asia Pacific regions.
‘FINDING ITS FOOTING’
A year after Burberry laid off a fifth of its workforce in a cost-cutting drive, Schulman said that the past 12 months marked a meaningful inflection point as the company returned to profitable sales growth.
Kathryn Hannon, senior investment manager at RBC Brewin Dolphin, said that in the bigger picture Burberry was “finding its footing” despite a tough global market.
“Against a backdrop of an uncertain geopolitical outlook and a still-cautious Chinese consumer, the luxury sector as a whole is having to work harder than ever,” she said.
Burberry’s operating profit for the financial year ended March 28 was 115 million pounds, rebounding from a loss of 3 million pounds the previous year.
Despite the recovery, it stopped short of reinstating its annual dividend. Ferry told investors that the company intended to do so, without specifying when.
Burberry also named investment firm Bridgepoint’s founder William Jackson as chair to succeed Gerry Murphy later in the year.