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During the first hour of trading today (18 July), the Burberry (LSE:BRBY) share price was all over the place as investors digested the group’s latest trading update. At one point, the stock of the fashion brand was up nearly 5%. It then moved into the red before recovering again. By 9am, it was 2.8% higher.
A mixed picture
Investors appeared uncertain of the group’s sales figures for the 13 weeks ended 28 June 2025. These showed a 6% fall in revenue compared to the same period in 2024. However, if the impact of exchange rate changes is removed the drop is a more modest 2%.
A closer look at the press release shows comparable store sales falling in its Greater China (-5%) and Asia Pacific (-4%) territories. Japan was described as “challenging” but South Korea saw some growth. However, it was a better picture in its Americas and EMEIA divisions with growth of 4% and 1%, respectively.
Overall, the decline was better than analysts had feared.
Perhaps most significantly, compared to the last quarter, all regions saw an increase in like-for-like store sales. Long-time shareholders will be hoping this is the start of a recovery in both the company’s top and bottom lines.
Still work to be done
However, Burberry remains cautious. It said: “We are still in the early stages of our turnaround, and the macroeconomic environment remains uncertain.”
It claims it’s made “early progress” in “reigniting brand desire”. Going forward, the emphasis is on simplification, productivity and cash flow. It says it will have secured £80m of annualised cost savings by the end of its current financial year.
The update comes after a miserable year for the group. For the 52 weeks ended 29 March 2025, it recorded a post-tax loss of £75m, equivalent to 20.9p a share. And it suspended its dividend.
However, this morning’s increase in its share price continued a rally that’s seen the group’s market cap increase by more than 60% since July 2024. Over this period, it’s been one of the top five best performers on the FTSE 250.
After such a good run, maybe some investors decided it was time to cash out. Perhaps that’s why the share price was lower after the first half-hour of trading.
A difficult sector
Burberry’s not the only luxury fashion house to experience falling sales. Many of the world’s most famous labels are having to cope with a difficult economic backdrop.
But the British icon’s been around since 1856. It’s survived plenty of downturns before and I’m confident that it will get through this one. With all the recent bad news, it’s easy to lose sight of the enduring power of its brand.
And I think there’s enough in this morning’s announcement to suggest the worst might be behind it.
But with its emphasis on outerwear, autumn is a key period for Burberry. It therefore feels like a good idea to come back and revisit the investment case once the brand’s revealed how its upcoming collection of trench coats, rainwear and other pieces have been received by fashion-conscious buyers. At the moment, investing in the stock would be a little too risky for me.
