Burberry (BRBY.L, BURBY) reported a smaller-than-expected 4% decline in quarterly comparable store sales on Friday, buoyed by strong holiday demand in the United States. The British luxury

retailer's performance marks a positive step in its ongoing turnaround strategy.

Shares of Burberry soared nearly 16% in London, as investors celebrated signs of improving consumer confidence in the luxury sector. The positive momentum also lifted shares in other high-end brands, with Kering gaining 10% and LVMH rising 3%.

Encouraging holiday sales

Burberry CEO Joshua Schulman, who took the helm six months ago, attributed the better-than-expected results to the company’s festive advertising campaigns. These campaigns focused on Burberry's iconic trench coats and scarves, rather than accessories like bags and shoes, appealing to a broader range of customers.

“We are extremely pleased with the results,” Schulman told reporters on a call. “In December, we saw new customer growth for the first time in over two years and an increase in brand desirability.”

Schulman’s strategy centers on emphasizing Burberry’s signature products to re-engage customers who were put off by previous design choices and pricing strategies. The company noted that outerwear and scarves performed particularly well across global markets.

Analyst reactions

Analysts had anticipated a 12% decline in Burberry’s third-quarter comparable sales, which run through December 28. The smaller drop was welcomed as a promising sign for the brand's recovery.

“We view these results as an early but encouraging step in the right direction,” RBC analysts said in a note.

Citi analysts also pointed to recent strong sales from luxury players Richemont and Brunello Cucinelli, suggesting that Burberry’s turnaround story could instill greater optimism among investors.

Regional performance

Sales in the Americas rose by 4% during the quarter, fueled by strong performance in New York, where Burberry recently reopened a refurbished store on 57th Street.

Other regions also showed improvement compared to previous quarters. In the Asia Pacific, sales declined by 9%, significantly better than the 28% drop reported in the second quarter. Sales in Europe, the Middle East, India, and Africa (EMEIA) fell by 2%, an improvement from the 10% decline in the prior quarter.

Burberry’s Chief Financial Officer, Kate Ferry, noted that markdowns introduced in December helped boost sales and clear inventory, while full-price sales also showed positive momentum.

Financial outlook

Despite a year-on-year drop in third-quarter retail revenue—£659 million ($818 million) compared to £706 million the previous year—Burberry remains optimistic about its financial prospects. The company expects to offset the adjusted operating loss of £41 million ($51 million) reported in the first half of the fiscal year, potentially achieving profitability for the full year. Photo by Ssu, Wikimedia commons.