Burberry Returns to Profit as Half-Year Revenue Climbs 6%

Burberry swung to a 54 million pound profit in the fiscal first half, against a loss of 18 million pounds a year earlier. Revenue rose 6 percent to 1.1 billion pounds for the six months to Sept. 26, the company reported from London.

Comparable retail sales grew 4 percent in both the first half and the second quarter. That marks the fifth consecutive quarter of growth for the British brand, which has been executing a turnaround under chief executive officer Josh Schulman.

Which channels and regions drove the numbers?

Wholesale revenue jumped 17 percent in the period, outstripping the company's own guidance. All major product categories grew. Every region except EMEIA — Europe, the Middle East, India and Africa — posted growth.

The Americas led, with sales up 12 percent. China followed at 7 percent, Asia-Pacific at 3 percent. EMEIA sales fell 2 percent in the six months.

CEO Josh Schulman said: "Our brand and our business are stronger. Five consecutive quarters of growth and improved quality of sales demonstrate that our strategy is working."

He was referring to Burberry Forward, the turnaround strategy launched two years ago. The claim of "improved quality of sales" is the company's own characterization; Burberry did not quantify the metric.

What sold, exactly?

Womenswear, menswear, childrenswear and accessories all grew in what Schulman called an uncertain environment. Core outerwear grew in the double digits. Leather goods grew strongly, with acceleration in the second quarter following marketing campaigns for bags, boots, shoes and accessories.

The company also cited improved store productivity. It offered no figure for that improvement, and no breakdown of how much of the growth came from price versus volume.

"Having laid the foundations for growth, I am more confident than ever that we will realize the full potential of this extraordinary British luxury brand," Schulman said.

What comes next?

Burberry expects further progress on its financial ambitions for the full fiscal year, including revenue growth and margin expansion. The company said it "will continue to drive performance and deliver sustainable long-term value."

The statement carried a caveat: "We remain mindful of the uncertain external environment." Burberry did not specify what margin expansion it targets, or how the EMEIA decline affects its regional plans.

The EMEIA softness and reliance on wholesale outperformance are the numbers to watch in the second half, when the brand must prove that five quarters of growth can withstand a weaker European market.