Burberry (LON: BRBY) shares jumped in early trade today after the luxury fashion house reported first-half adjusted operating profit of £62m, up 225% from £19m a year earlier. Adjusted means before one-off items such as restructuring.
At 08:46, shares stood at 1171.5p, up 7.18% on yesterday’s close of 1093p, after a high of 1197.5p. That is above the 50-day average of 1050.6p and the 200-day average of 1103.6p, though still below the August closing high of 1210.5p.
Revenue rose 6% to £1,098m. Comparable retail sales, which exclude store openings and closures, grew 4%, a fifth straight quarter of growth, against 0% a year earlier. The Americas rose 12% and Greater China 7%, while the EMEIA region fell 2%. Wholesale, sales to department stores and other retail partners, grew 17% at constant exchange rates, meaning currency moves were stripped out. Chief Executive Officer Joshua Schulman said:
Two years ago, we launched Burberry Forward. Today, our brand and our business are stronger. Five consecutive quarters of growth and improved quality of sales demonstrate that our strategy is working.
Joshua Schulman, Chief Executive Officer, Burberry
Adjusted operating margin reached 5.7% against 1.9%. Costs did most of the work: adjusted operating expenses of £687m were flat at constant exchange rates, and fell from 66.1% to 62.6% of sales. Gross margin edged up to 68.3%, helped in part by a one-off supply chain rebate. Reported operating profit was £54m, against an £18m loss.
The 225% is largely a low-base effect, and the cash picture is weaker. Free cash outflow widened to £147m from £50m as Burberry rebuilt inventory before peak trading. The adjusted tax rate was 55%, and Burberry declared no interim dividend.
Burberry said it remains mindful of the uncertain external environment. It expects revenue growth and margin expansion in the 2026/27 year and guided wholesale growth of 10% to 12%, but gave no numerical profit target. The second half is seasonally bigger: last year’s full-year adjusted operating profit was £160m. A third-quarter trading update follows on 21 January, and a Capital Markets Day in London in March.