Burberry delivered its Q3 trading update on Friday and once again its sales have fallen — but by less than analysts expected. And the company said it’s encouraged by the reception to the changes it has been making, although there’s still lots of work to do.

Looking first at the numbers, the company said that retail revenue in the 13 weeks to late December was down 7% to £659 million on a reported basis and down 3% at constant currency. It didn’t give a figure for wholesale.

Analysts had been predicting a 12% decline in comparable sales but they actually fell ‘only’ 4%, which is the same percentage drop as they saw for the same quarter of the previous year. The overall revenue figure was helped to the tune of 1% by new space.

Burberry also said it’s now more likely that it can avoid a full-year operating loss (more of that later).

Back with Q3, regionally comparable store sales fell by 9% in Asia Pacific and by 2% in EMEIA. But they rose 4% in the Americas.

Within Asia Pacific, mainland China was down 7% and South Asia Pacific plunge 19%, while South Korea was down 12%. But Japan rose 4%, helped by shoppers from China.

The 2% EMEIA drop was similar for both locals and tourists and globally, the EMEIA customer group was flat.

The Americas growth was boosted by local spend. Globally, the Americas customer “was in line with the regional performance” and the business was “encouraged by performance in the New York area where we concentrated local marketing efforts after reopening our refurbished 57th St Store”.

By product, outerwear and scarves continued to outperform globally. 

As mentioned, the company has been making a number of changes under its new CEO Joel Schulman and in the third quarter it initiated a brand reset with its 360-degree ‘It’s Always Burberry Weather’ outerwear campaign and ‘Wrapped in Burberry’ festive campaign.

It also “aligned [its] product focus around recognisable brand signifiers, core categories and good/better/best pricing in a luxury context”.

And it “enhanced visual merchandising in stores with festive windows celebrating outerwear and scarves, the reintroduction of mannequins and cross-category styling; introduced new styling online to appeal to broad range of luxury customers and digital innovation with our virtual scarf try-on capability”.

Plus it “reunited” the creative and commercial teams in newly refurbished headquarters in London, “setting the stage for improved collaboration and productivity”.

Clearly, none of this was enough to rescue the third quarter from falling into negative territory, but it appeared to slow down the decline. So what of the outlook for the rest of the year? 

The company said it’s “acting with urgency to stabilise the business and position the brand for a return to sustainable, profitable growth… While we recognise we are still early in our transformation, we are encouraged by the response from customers and partners over the festive period”. 

And importantly, it said that “in light of our Q3 performance, it is now more likely our second-half results will broadly offset the first-half adjusted operating loss, notwithstanding the uncertain macroeconomic environment”.

That’s not a cast iron guarantee of a full-year profit but in the context of the brand’s decline in recent periods, it’s undeniably good news.

That said, wholesale revenue is expected to decline by around 35% in FY25.

CEO Joel Schulman added: “Since launching Burberry Forward in November, we have moved at pace to advance our strategy to reignite brand desire, improve our performance and drive long-term value creation. We are encouraged by the response to our… campaign[s]. These activations resonated with a broad range of luxury customers leading to an improvement in brand desirability and strength in outerwear and scarves.

“The acceleration of our core categories reinforces our belief that Burberry has the most opportunity where we have the most authenticity and that our strategic plan will deliver sustainable, profitable growth over time. However, we recognise that it is still very early in our transformation and there remains much to do.”