Burberry Group PLC (LSE:BRBY) shares fell despite the fashion house hailing a "meaningful inflection point" in its turnaround strategy as it returned to comparable sales growth and beat profit expectations for the 2026 financial year.
The FTSE 100 maker of trench coats and scarves said fourth-quarter retail comparable sales rose 5%, ahead of analyst expectations of 4.6%, helped by a 10% increase in Greater China and a 10% rise in the Americas.
For the full year to 28 March, revenue slipped 2% to £2.42 billion, broadly in line with forecasts, while adjusted operating profit rose to £160 million from £26 million a year earlier and came in ahead of consensus estimates of £153.6 million.
Adjusted operating margins were much improved at 6.6% compared to 1.0% last year.
Comparable store sales returned to growth from the second quarter onwards, with momentum strengthening through the year. Full-year comparable sales rose 2% compared with a 12% decline a year earlier.
Chief executive Joshua Schulman said: “This financial year marks a meaningful inflection point for Burberry... Our strategy is working and there are clear opportunities for further growth.”
The group said outerwear and scarves both delivered double-digit growth in the second half, while e-commerce sales increased by high teens percentages.
Free cash flow rose to £141 million from £65 million a year earlier.
Burberry said it expected further progress in the new financial year, with revenue growth and margin expansion supported by mid-single digit wholesale growth in the first half and £100 million of annualised cost savings by year-end, partly offset by a £10 million forex headwind for both revenue and adjusted operating profit.
The company also separately announced today that chair Gerry Murphy, who joined the board eight years ago, is retiring. Senior independent director William Jackson will succeed him.
Burberry shares fell 2.7% to 1,131.5p in early trading on Thursday.
Analysts at Jefferies said the grpoup "solid end to 25/26 was well anticipated" and not unsurprising after a strong finish from peer Moncler.
The "significant" fourth-quarter gross margin beat, combined with the benefit of the cost savings programme, resulted in a 4% FY EBIT beat versus the sell-side analyst consensus "but likely a delivery slightly below the more bullish buy-side hopes", ie institutional funds.
The analysts said there may also be a "big debate" about how guidance for the new 2027 year's revenue growth and margin expansion is caveated by the uncertain geopolitical and macro environment, compared to a consensus forecast that expects 290 basis points of EBIT progress.
** UPDATE: Adds shares price and broker comment **