Burberry Group plc

For FY26, Burberry reported total revenue stable at constant exchange rates and down 2% reported; comparable retail sales rose 2% for the year and 5% in Q4. Gross margin was 67.9%, up 530 basis points at constant exchange rates, adjusted operating profit was GBP 160 million versus GBP 26 million last year, and adjusted EPS was 15.2p. Free cash flow was GBP 141 million, operating cash flow was GBP 582 million, capital expenditure was GBP 113 million, borrowings were GBP 511 million versus GBP 738 million a year ago, and net debt to adjusted EBITDA was 1.6x. Looking to FY27, management expects further revenue growth and margin expansion, retail space broadly stable, wholesale revenue to grow by mid-single-digit percentage in the first half, capex of about GBP 120 million, around GBP 5 million of restructuring-related adjusting items, and a GBP 10 million currency headwind on both revenue and adjusted operating profit; the effective tax rate is expected to be 27% to 30%.

Josh Schulman framed the year as a meaningful inflection point, saying Burberry has moved from stabilization to renewed brand momentum and growth. He emphasized that the strategy is resonating with Gen Z and with customers in key categories like outerwear and scarves, while also extending into leather goods, knitwear, and other categories. His tone was confident and constructive, repeatedly saying the company is “just getting started” and that Burberry can return to GBP 3 billion in sales and beyond.

Kate Ferry focused on execution against the Burberry Forward plan and the financial benefits it is producing. She highlighted the 530 bps gross margin improvement to 67.9%, adjusted operating profit of GBP 160 million, GBP 80 million of the GBP 100 million annualized savings target already delivered in FY26, and net debt to adjusted EBITDA improving to 1.6x from 2.3x. She also said free cash flow was GBP 141 million, capex was GBP 113 million, and FY27 should still include around GBP 5 million of restructuring-related costs, about GBP 120 million of capex, and a GBP 10 million currency headwind.

Analysts focused on the sustainability of the turnaround: traffic versus conversion, AUR trends, whether marketing spend is masking the underlying improvement, and how much more gross margin can expand after the inventory reset. Management said traffic remains challenging, but conversion is strong, AUR was slightly down for the year but stabilized, and they do not expect AUR to be a headwind next year. On marketing and stores, Schulman said spending will stay at a high single-digit percentage of sales and argued there are multiple growth levers beyond marketing, while also noting the store fleet is being rationalized and upgraded, with net 12 store changes this year. Questions on Saks, discounting, and outlets were met with comments that Saks remains a key partner, full-price sell-through improved globally, and outlets are about 13% of the store count and broadly acceptable.