Burberry (LON: BRBY) surged over 15% on Friday after the luxury fashion house reported better-than-expected results for the third quarter of its financial year.
The company revealed that comparable store sales declined by 4% in the three months to December, beating analysts’ expectations of a 12% drop.
Retail revenue fell 7% year-on-year to £659 million at reported exchange rates or 3% at constant exchange rates.
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The decline in sales was seemingly due to a weaker performance in the Asia-Pacific region, where comparable sales dropped 9%, including a 7% decline in Mainland China.
However, the Americas saw a 4% increase, driven by strong local spending, while sales in Europe, the Middle East, India, and Africa (EMEIA) declined 2%.
The company credited its recent brand reset, including the “It’s Always Burberry Weather” and “Wrapped in Burberry” campaigns, as well as improvements in visual merchandising, for bolstering demand for its core categories like outerwear and scarves.
Burberry’s CEO, Joshua Schulman, noted that the campaigns had improved brand desirability, with the company adding that it is “encouraged by the response from customers and partners over the festive period,”
Despite the challenging macroeconomic environment, Burberry expects its second-half results to broadly offset its first-half losses. The company reiterated its confidence in its transformation strategy, aiming to stabilise the business and drive long-term growth.
With shares rallying sharply, Burberry shares are now back trading at levels last seen in April 2024. However, they still have a significant way to go before reaching their April 2023 highs.
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