Is Burberry Making Money Again? Basically yes, but it's too soon to declare victory

For a long time, Burberry faced a number of serious problems. In May 2024, the legendary British brand was in deep crisis, which led to the immediate dismissal of CEO Gobetti and the appointment of new executive Joshua Schulman. Under his leadership, communications and above all pricing were overhauled, and eventually, in January 2025, the brand began its recovery. Admittedly, that May brought the unpleasant news of mass layoffs, which sat uneasily alongside the bonuses pocketed by the new CEO — who nonetheless continued to drive sales higher, investing also in summer music festivals. And today, a year on, the brand has proudly presented interim results for 2026, recording its fifth consecutive quarter of growth. But is it too soon to declare victory? To answer that, we need to look more closely at the numbers.

A question of authority

The cornerstone of Schulman's strategy at Burberry was simple: sell what the brand does best. Scarves, trench coats, outerwear, hats, and the entire product universe tied to the English countryside were brought back into focus, along with an aesthetic that is less "fashion-forward" and more "old England", seasoned with a certain dose of humour. Alongside this, work was done on the retail mix — with the brand pushing harder through multi-brand retailers — as well as on its own stores, and on simplifying the company's internal structures. The result, today, is that in the first six months of the year Burberry's revenues grew by 6%, just topping the one-billion-pound mark.

Compared to the same period last year, sales rose 4% and margins improved considerably. Where last year, for every £100 in sales, £1.90 remained after all operating costs, today that figure stands at £5.70; and operating profit for the half-year — that is, revenues remaining after operating and management costs — rose from £19 million to £62 million. This improvement stems primarily from two factors: first, the brand sold more at full price with fewer discounts; second, it received an extraordinary rebate or discount from its suppliers for the period.

This positive picture was, however, offset by the brand's decision to stock its warehouses more heavily than usual ahead of the upcoming Christmas and winter season, driving up additional logistics and storage costs along with various other provisions. Another factor weighing on the brand's net earnings was the expansion of the wholesale channel (where sales grew by 17%), which carries lower margins. On their direct channels there was also growth, particularly online. Overall, though, greater efficiency in fixed costs kept those expenses stable while allowing increased investment in marketing.

Among the strongest-performing markets is, unsurprisingly, North America, where sales rose 11% in the last quarter, and China, where growth came in at 5%. The rest of Asia, and especially South Korea, saw sales climb 3%, while Europe came in at a slight loss of 1%, due to reduced tourism and weakness in stores weighed down by outlet sales. The Middle East region, which the brand groups together with Europe, was responsible for a 3% decline in that combined area. The best-performing category is, naturally, outerwear, though all divisions appear to be growing. So why is it not yet time to declare victory?

Making money doesn't mean having it

Burberry's results have been excellent, especially given the current climate. And yet during this pre-Christmas period, and particularly over these recent months, more cash has left the brand's coffers than has come in. This is the case because, as noted, the brand has stocked up its warehouses ahead of the season, spending somewhat more than usual. It is, in a sense, a kind of routine operation whose results will become clear next March, when the full-year fiscal results are released (for a financial year that, it should be remembered, is offset from the calendar year) — results that nonetheless point to an improvement in the brand's financial position, even as it continues to grapple with significant debt.

At the end of September, Burberry had loans and bonds totalling £507 million and lease liabilities on its stores of £940 million. Cash on hand stood at £459 million. Subtracting available liquidity from total debt gives a net debt figure of £988 million. Now, this figure matters not because it needs to be repaid quickly, but because it is used to assess how sustainable the brand's debt load is — and therefore how worthwhile it is to "bet" on it in the stock market.

To gauge this, the debt is compared against the operating profit generated over a year. At present, if the brand were to use all of its operating profit solely to pay down its debts, it would take one year and seven months. A year ago, it would have taken two years and two months. This figure matters because, to put it simply, it signals that Burberry is a reliable debtor and that it is genuinely making significant progress toward a stable financial footing. The improvement is driven by both rising profits and a modest reduction in debt. This brightens the outlook for the months ahead, during which the brand intends to grow both profits and margins, expand the wholesale channel slightly, and optimise savings further. Let us hope, then, that Christmas is kind to the brand.